Whatever stage your business is at, it makes sense to have an exit strategy in mind.
If one day you might sell the business or part of it, it pays to keep it in good shape and ensure that there are no issues lurking beneath the surface which might reduce the value of the business to a potential buyer or worse, jeopardise a sale.
Here are some issues to think about which can sometimes cause difficulties on a sale:
| Shareholder relations: | Is consent of all or a particular percentage of shareholders required for a sale? Can minority shareholders be forced to sell (Drag along)? Is there a suitable shareholders agreement in place? |
| Property: | How long is left on any leases? Are there any restrictions on assignment of leases? Have all lease covenants (e.g. payment of rent, repairing covenants) been complied with? Are there any outstanding rent reviews? |
| Employees: | Do you have proper employment contracts for your staff? What are the notice periods for key employees? Are there any terms of employment which might be unattractive to a potential buyer? Are there any potential or actual disputes with employees or former employees? |
| Contracts: | Do you have proper written contracts in place with key clients, customers and suppliers? How long is left on those contracts? Are they assignable? Do they contain ‘change of control’ clauses allowing other party to terminate in the event of a takeover of your company? |
| Intellectual Property: | Does the company own the intellectual property rights to its products/business? Are any trademarks, design rights and patents properly registered in all relevant territories? Are there any potential infringements of your intellectual property? |
| Disputes: | Are there any ongoing or potential disputes or court claims which might be unattractive to a buyer? Could they be settled or litigated? |
| Accounts and tax: | Are your accounts up to date and in good order, with all tax accounted for and paid? |
| Borrowing: | What would happen to any borrowing on a sale? Do the terms of any loan agreement require consent of the lender to any assignment of the business/change of control? |
If you want to discuss how we can help you get your business in shape for sale, please contact Roger Wilkinson rw@woodfords.co.uk.
