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Navigating the Business Sale Process

When it comes to selling your business, navigating the sale process can be a bit tricky. From evaluating offers to negotiating terms, drafting contracts and managing due diligence, there are a lot of moving parts. In our sixth exit strategy guide, we’ll break down the essential steps to help you stay on track and ensure you’re making the right decisions at every stage.
Two Key Reliefs
Ideally, you’ll receive multiple offers for the business, introducing some competition. However, receiving the right offer is more important than the quantity of offers. When a buyer makes an offer, they will also outline some initial terms. If a prospective buyer doesn’t make an offer, ask why and take action accordingly.
A careful review of the offer should be conducted, with guidance from your advisors. Consider what the offer means in terms of the amount and timing of financial cash flows, tax implications and your ongoing commitment post-deal. Your advisors will be key to understanding the intricacies of the offer and help you determine whether it’s right for you.It’s especially important to seek robust advice at this stage from your accountant or tax advisor. They can help clarify the tax payable on the sale proceeds and may recommend adjustments to the deal structure that may be required to reduce tax liabilities.
You may find it helpful to get your deal advisor to handle the negotiations for you. The valuation you prepared earlier in the process will serve as a useful reference point when assessing the offer, along with your initial self-reflection.Does the offer meet your key objectives? For example, does the buyer want to pay for the shares in their own company? This means you won’t receive any cash up front, but you may benefit from an increase in the value of their shares. Or, do they want to tie you to the business for another two years when you’d prefer to spend more time travelling?
Once you’ve accepted an offer, the process of drafting the contract (or “SPA” – Share Purchase Agreement) begins. You’ll need to collaborate closely with your legal team and seek advice from your accountant as well. While this can be time-consuming and involved, it’s crucial to get it right.
At the same time, the buyer will begin the due diligence process. All the preparation you’ve done up to this point will come into play. Documents will be uploaded to a virtual data room for review, and buyers will typically request additional information and further explanations – this can take time. It’s important to keep track of what’s been said, to whom and when. Due diligence usually covers the legal, financial and commercial aspects of the business.
The contract may go through several iterations and require further negotiation as the results of the due diligence process are factored in. There will also be various documents accompanying the contract.For instance, if you’ll be working for the buyer after the deal, you’ll need to agree on the terms of a new employment contract before completion. At this stage, good advice from your advisors is crucial and can significantly influence the success of the deal.
A timeline for completion will typically be provided by the legal team. At completion, documents will need to be signed, and funds transferred. There are various intricacies involved, which your advisors will guide you through.
Some of the funds may be deferred for a period, some could be contingent on the business’s performance or others may be deferred until the completion accounts are agreed upon. This is where the expertise of your advisors really makes a difference.
Navigating the sale process involves evaluating offers, seeking expert advice on financial and tax matters, negotiating terms based on your objectives and ensuring thorough due diligence. Clear contract drafting, managing the completion timeline and handling deferred payments or contingencies are also key to a successful deal.
Get in touch

For more information or guidance on how to navigate your exit strategy, contact Cathy Revis, Head of Deal Advisory, on 02380 332 733 or email cathyrevis@fiandertovell.co.uk

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