Whether you are planning to take a step back, or you are ready to try something new, selling your business is not an easy decision to make. It takes a lot of planning for a successful exit strategy to ensure you secure the best valuation you can get and of course, a suitable buyer to take over all the hard work you have put into it.
Prepare to sell your business
Firstly, you would want to assess how your business appeals to potential buyers. You would want to look at things such as, customer loyalty, profits, competition and opportunities to expand.
It’s worth taking some time out in making sure your business is in a good position before becoming available for sale. To ensure you have a smooth transaction with your buyer, you should organise all your paperwork and contracts, make sure your accounts are up to date and be sure to resolve any ongoing disputes.
How much is your business worth?
Now it’s time to do the maths. The value of a business is more than just its assets. Buyers would also be interested in your staff, revenue, liabilities, reputation etc. Unfortunately, when it comes to business valuation, settling on a price can be difficult, but there are ways you can estimate the final market price.
Whatever price you decide on, you should still be prepared for negotiations. If you’re unsure, there are independent advisors who can value your business for you and give you their expert opinion. This is particularly beneficial if you have a small business.
Time to find your buyer
A business brokers can help you find the right buyer and advertise your business on your behalf. However, you should always do your research and be careful when choosing a broker. Make sure you agree with all their terms and conditions before you make any agreements. You would also need to do extensive due diligence on your buyers by seeking references and doing all the necessary credit-checks before entering into any agreement.
The small print
You’ll want to get all the finer details written in black and white so that all parties involved have a clear understanding of the terms and conditions of the sale. This would include the price, assets and date of transfer. This reduces the chance of any potential issues arising down the line. However, your solicitor should be able to help you with most of this.
Completing a business purchase agreement
A business purchase agreement transfers ownership of the business over to the new buyer. It would include the terms, price, completion date and any clauses. This is a complicated document to have to complete so it is always advisable to seek help from a solicitor as you would when selling a house.
Updating changes with HMRC
You would need to contact HMRC to let them know if you are no longer self-employed to cancel your Class 2 National Insurance contributions. If you are a sole trader, you will need to complete your final self-assessment by the deadline. Don’t forget to include the date you stopped trading and pay any tax and National Insurance owed.
If you are in a Partnership, you will need to fill out a self-assessment by the deadline if you’re selling your share. If you’re Selling the whole partnership, then you must complete a personal self-assessment and the nominated partner must also fill out a partnership tax return. Again, don’t forget to include the date you stopped trading and pay any tax and National Insurance owed.
If you are a Limited company and selling the entire shareholding, you’ll need to appoint new directors before you resign and notify Companies House of the changes. If you’re only selling part of your business, you’ll need to let your staff know about the changes if they’re going to be impacted by the sale.
