Legal Considerations When Selling Your Business

Deciding to sell your business is a big step to take and it’s important to gain as much knowledge as possible about the process to make it go as smoothly as possible. In addition to learning more about each aspect of the process yourself, it pays to have the right experts in place to help you from the moment you make the decision to sell. Especially when it comes to the legalities.

Remember, selling your business is not just a transaction – it’s a culmination of your hard work and dedication, so protecting your interests should be a top priority throughout the sale process.

Here are the key legal considerations you need to navigate throughout the process of selling your business.

Legal Structure and Contracts

Be sure to review and update any necessary contracts with customers, suppliers, staff and any other stakeholders that may be relevant before you put your business on the market.

Protect the company’s primary assets – from people to products to property.

Identify anything that could pose a problem during the sale process and seek to resolve it as a matter of urgency.

Confidentiality Agreements

Before you start sharing sensitive information with prospective buyers, put confidentiality agreements in place. Any breach of confidential information could harm your business’ value and reputation therefore making securing a sale more difficult.

Due Diligence

Prepare yourself in advance knowing that buyers will conduct thorough due diligence to assess the value and risks associated with your business. As a seller, you must be prepared to provide accurate and comprehensive information about your company’s financials, operations, legal status, and any potential liabilities. Working closely with experienced advisors can help you navigate this process, identify any potential red flags, and help you address any concerns that a buyer may have.

Regulatory Compliance

If your business is governed by a regulatory body make sure that all your obligations are met and you get the appropriate experts in place to ensure the sale remains compliant.

Negotiating the Sale Agreement

Once you’ve found a suitable buyer, negotiating the terms of the sale and preparing the agreement is a critical step in finalising the deal. This agreement will outline the terms and conditions of the sale, including the purchase price, payment structure, warranties, and indemnities. Again, having the right experts assigned will protect your current and future interests – the relevant legal professionals and an experienced business broker are must-haves.

Transfer of Assets and Liabilities

Depending on the nature of your business, transferring assets and liabilities to the buyer can be complex. From intellectual property rights to outstanding debts, all parties need to carefully consider what’s included in the sale/purchase, how things will be passed over to the buyer, and what will happen in the future in relation to any IP or assets that aren’t included in the original deal.

Completion and Post-Sale Obligations

Once the sale is complete you will likely still have some legal obligations to fulfil. These could include managing the transfer of ownership, notifying relevant authorities, and settling any outstanding liabilities as agreed.

Also, you as an individual may have post-sale commitments, such as providing transitional support to the new owner, taking on a new role either as either an executive or advisor/consultant, or adhering to non-compete agreements.

How Peak Value Partners Can Help

We will provide a free valuation of your business and can work with you through every step of the sale process – including being able to recommend legal professionals from our contacts.

There’s never any obligation and discussions are always confidential.