Advice from Rollits on how to sell your business
Hull Is This had a chat with Josh Hobson, a Solicitor in the Corporate Team to find what’s involved when selling a business.
“There are numerous reasons why a business owner may decide to sell their company,” said Josh. “It could be that they’ve reached retirement age and are ready to take a step back. When this is the case, they will want to have a good exit route. Another scenario is when a business owner is ready to start a new career chapter and wants to ensure that their company is in good hands going forward.”
Josh also pointed out that larger companies tend to acquire smaller businesses towards the end of the financial year, which is on 5th April each year. This is so that the purchase can be included in the current tax year and be offset against the company’s corporation tax. Regardless of when in the year the sale of a business takes place, it’s crucial that the current owner has all of their business affairs in order beforehand.
“Selling a business isn’t just a case of signing a document and handing over the keys,” said Josh. “There are multiple factors that need to be organised, reviewed and agreed first, such as assets, intellectual property, employment arrangements, and all forms of regulatory compliance. The buyer may also require evidence that there are contracts in place with clients or customers, rather than just relying on long-term relationships. If a business is unable to answer queries raised by a buyer it might put the buyer off, but if everything is in place or there’s a clear action plan for resolving any issues, it will be a much smoother process.
“In many cases, a large group of companies will be looking to add a particular type of offering, a complementary offering, to its existing services. For instance, a property development company may be looking for a landscape gardening or interior design business that it can absorb into its group, giving it greater control over how it operates.”
Josh also explained that every business sale is different and depends on its complexity and the approach taken by the parties involved, but the rough timeframe for selling a business is 8-10 weeks in the best-case scenario, and more likely around three to four months. In some cases it can take longer, such as if there are issues that need resolving.
“Deal fatigue is quite common,” said Josh. “At the start of the process everyone is enthusiastic, but it can sometimes prove quite strenuous. For example, the buyer may ask questions you hadn’t anticipated and a detailed due diligence exercise can be lengthy and time-consuming. It’s important to bear in mind that you will need to juggle the management of your business alongside discussions with the buyer, so it can be a very busy few weeks. However, Rollits is here to make everything run as smoothly as possible and the end result should be very rewarding in multiple ways.”
Though it’s usually private limited companies that are purchased by larger organisations, the selling of a business can also be applied to sole traders and other business entities. Each business entity has its own unique considerations during a sale process. A sale doesn’t have to end an owner’s involvement in the business, as the agreement could include them being offered a role by the company purchasing their business.
Josh added: “Don’t be afraid to prepare a company for a sale in advance, especially if it’s a family business. Succession planning can be difficult and may not turn out the way you expected, as a family member may decide that they don’t want to take over the business after all. Having everything in order makes it a lot easier to sell your business when the time comes.”
If you’re interested in selling a business, get in touch with the team at Rollits for fully tailored advice and support.