Preparing for a seamless sale

Preparing for a seamless sale

Business owners may decide to sell for a variety of reasons - perhaps as part of their retirement plans, a need to unlock the value they’ve built, a shift in personal priorities, or a desire to pursue something new altogether.

Regardless of the motivation, one thing remains true: to maximise the value of the sale, business owners should begin preparing for it as early as possible.

Lydia Sevenoaks, Solicitor in Hay & Kilner’s Corporate team, explains how a legal “health check” conducted in advance of sale can streamline due diligence, mitigate risk, and help you achieve maximum value for your business.

Key issues to have on your radar

1. Contracts & consents
Do you have formalised written agreements in place with your key customers and suppliers?

It is not uncommon for such relationships to sometimes be based on trust, when considering the length of the business relationship, but this is unlikely to be sufficient to give prospective buyers the comfort they need that these arrangements will continue post-acquisition.

It’s therefore advisable to secure fully executed copies of all contracts with key customers, suppliers, and service providers to ensure these can be produced for any potential acquirer.

It’s also worth considering any “change-of-control” clauses in the contracts currently in place within the business and determining exactly what counts as a “change of control” under each contract, to check whether such trigger gives the other party the right to terminate, renegotiate, or whether any assigning of the contract may require their consent.

Other consents also need to be considered early-on and factored into overall deal timeline, for example regulatory approval where applicable, as well as other third-party consents which may be relevant, such as lender and landlord consent.

2. Statutory books & corporate records
If you’re selling your shares in a company, it is important to ensure your statutory registers (also known as “the company books”) are up-to-date and accurate, and that Companies House filings and records align with these.

These registers evidence the legal title to the shares any prospective buyer will be acquiring, and so it is crucial that such ownership is fully and properly provided for in these registers, and that the Companies House records correspond with these, so that the buyer has certainty as to the shareholding they’re acquiring.

3. Employees & property
Another key consideration is to ensure that all employment contracts and property arrangements are fully documented, fit for purpose and compliant with current laws.

Prospective buyers will often scrutinise these documents to assess potential liabilities, obligations, and operational continuity. Taking the time to review and update these therefore not only strengthens your negotiation position but can also help prevent delays, renegotiations, or reductions in the sale price during the transaction timeline.

4. Confidentiality
Alongside legal due diligence, financial due diligence will be a crucial part of the process, as any prospective buyer will naturally want to examine the accounts and other financial records of the business to understand precisely what they’re acquiring.

However, if the prospective buyer happens to be a competitor — which is often the case — you’ll likely want to avoid giving them access to your confidential information before any agreement is in place.

Before sharing these details about the business, it’s therefore wise to put a confidentiality or non-disclosure agreement in place and consider anonymising particularly sensitive information, in consultation with your advisors. More critical details can always be disclosed at a later stage.

5. Transition & security
Business owners will also need to think about how they want to exit the business — whether through a complete “clean break”, or by staying on for an agreed handover period to help ensure a smooth transition for both the buyer and the business.

Naturally, the deal structure and payment terms also require careful thought. If the full purchase price won’t be received upfront, the range of protections that can be put in place should be carefully considered, to safeguard against the risk of the buyer defaulting on the remaining balance.

Trusted corporate law expertise

There are never any guarantees that the sale of your business will be completely seamless, but taking a proactive approach and assembling your team of trusted advisors early-on should pre-empt common pitfalls and position you for a smoother sale process.

Hay & Kilner’s Corporate Team advises on some of the North East’s most complex and high-value transactions. Our strength lies in delivering practical, focused legal advice - no matter how intricate your deal.

We support clients across all sectors, helping them prepare for, structure, and complete successful business sales.

Get in touch to find out how we can help you.