The 12 Days Of…Selling Your Business
Reasons to choose Wilson Browne
In the immortal words of Noddy Holder, “It’s Christmas!!!” and what would Christmas be without a slightly tongue-in-cheek “12 days of”.
Yes, we know that strictly speaking, the 12 days start on 25th December, but everyone will be languishing in a stupor of turkey and mince pies by then, so here we go… one key point to consider, each working day in the run-up to Christmas.
Selling a business is no quick task, and can even feel tedious at times. Therefore, in the spirit of Christmas (and the longest and most tedious Christmas rhyme we know) we present to you the 12 days of selling your business…
Holly Threlfall.
On the first day of my sale, my lawyer asked of me …what do you want to achieve?
When acting on a sale, the most important question and the one we will consider at every stage of the deal…what does my client need to achieve out of this? What are their goals? This should never cease to be at the forefront of the transaction and just like the rhyme, should be asked and repeated at every step.
Rebekah Hobbs
On the second day of my sale, my lawyer asked of me …
Who wants to buy it?
and
What do you want to achieve?
Understanding the nature and ambitions of the buyer is just as prudent as understanding a seller’s goals. This can heavily impact risk appetite, deal structure and progress of negotiations throughout a transaction.
Andrew Kerr
On the third day of my sale, my lawyer asked of me…
Who else is advising?
Who wants to buy it?
and
What do you want to achieve?
The legal aspects aren’t the only part of a transaction. You will need to consider the financial implications on you and have the input of your businesses’ historic advisors throughout the process. We therefore work closely with your financial advisor, accountant, tax advisor and corporate financier brokering the deal to pull your transaction together.
Kate Newman
On the fourth day of my sale, my lawyer asked of me …
What is your structure?
Who else is advising?
Who wants to buy it?
and
What do you want to achieve?
Business sales can take many forms, including trade sales of the entire share capital, asset sales of a going concern, management buy-outs and even employee ownership. You have to carefully consider the components of your specific transaction and work with your advisors and the buyer to craft a deal that works for all.
Duncan Crowther
On the fifth day of my sale my lawyer asked of me …
What are your payment terms?
What is your structure?
Who else is advising?
Who wants to buy it?
and
What do you want to achieve
The ‘gold rings’ and what you are going to get paid are a key part of any transaction. Not every transaction has payment in full on completion, you may agree to defer consideration, variation based on assets at completion or agree to an earn-out based on post-completion performance. Being clear on what you are getting for your business, and when, is fundamental and impacts many subsequent stages. Of course, your professional advisors and proposed structure, buyer motives and personal goals all feed into this.
Jennie Jahina
On the sixth day of my sale, my lawyer asked of me …
Have you thought about employees?
What are your payment terms?
What is your structure?
Who else is advising?
Who wants to buy it?
and
What do you want to achieve?
The impact of a transaction can reach far beyond the buyer and the seller themselves. Retention of employees will be crucial to the business and there will likely be key employees of particular concern. A change of ownership can be very disruptive and disconcerting to employees if not approached in the right way, and especially if the buyer wants to make changes to terms of employment (which in itself can be a minefield). Therefore, when getting into the detail of a transaction how your employees are impacted and what steps you may need to take are key factors.
Michelle Woolston
On the seventh day of my sale, my lawyer asked of me …
What about the property?
Have you thought about employees?
What are your payment terms?
What is your structure?
Who else is advising?
Who wants to buy it?
and
What do you want to achieve?
The majority of businesses operate from a commercial property. The property isn’t always vested in the target entity, or it may be but the sellers might want to remove it and either retain it or grant a lease back to the target. The property may not be changing ownership at all but will remain with the target entity, but the buyer will still need to carry out its due diligence and raise enquiries about the property, undertake searches and assess the state of repair and condition of the property. The buyer may or may not have their own property already, which can impact employees. The condition of the property and the terms of occupation may affect the purchase price and ultimately the structure of the transaction and the deal appetite of all parties.
Catherine Healy
On the eighth day of my sale, my lawyer asked of me …
How are you maintaining continuity?
What about the property?
Have you thought about employees?
What are your payment terms?
What is your structure?
Who else is advising?
Who wants to buy it?
and
What do you want to achieve?
Continuity of business. This is a key consideration for both buyer and seller and really what we mean is, what impact is this transaction or change going to have on the business. Are there any regulatory consents which will be required and need actioning? Are there any contracts which could terminate as a result of the change of control? As the transaction gains momentum, continuity becomes a key factor to ensure a smooth completion.
Sara Ali
On the ninth day of my sale, my lawyer asked of me …
What are your responses to these enquiries?
How are you maintaining continuity?
What about the property?
Have you thought about employees?
What are your payment terms?
What is your structure?
Who else is advising?
Who wants to buy it?
and
What do you want to achieve?
Your buyer is going to want to know about your business in detail in order to consider the transaction. Therefore, they will raise a series of legal, accounting, property, employment, commercial and tax enquiries. We will work with your other advisors in responding to these to get their take, but ultimately we will need your input as you know your business better than anyone. The outcome of these enquiries may cause the structure to be re-visited or a variation of payment terms therefore these may be re-visited and swift responses are key to achieving your exit goals.
Tom Charteress
On the tenth day of my sale, my lawyer asked of me …
What questions do you have on this agreement?
What are your responses to these enquiries?
How are you maintaining continuity?
What about the property?
Have you thought about employees?
What are your payment terms?
What is your structure?
Who else is advising?
Who wants to buy it?
and
What do you want to achieve?
Your sale will be governed by a contract and a series of ‘ancillary’ documents, which we will review and advise you on in the context of all information which we have gathered including the structure of your deal, what your payment terms are, what key information about the company needs to be incorporated and, ultimately, what are your goals. No two corporate sales are the same, therefore each time the agreement will be personal and tailored to you. We therefore will want to make sure not only that you are appraised of the content, but that you are agreed with proceeding on those terms and don’t have any lingering queries. Once we have completed, there is no going back. So ask the questions on the transaction documents whilst you can!
Rebekah Hobbs
On the eleventh day of my sale, my lawyer asked of me …
What do you need to tell your buyer?
What questions do you have on this agreement?
What are your responses to these enquiries?
How are you maintaining continuity?
What about the property?
Have you thought about employees?
What are your payment terms?
What is your structure?
Who else is advising?
Who wants to buy it?
and
What do you want to achieve?
Disclosure can be another lengthy part of a transaction. You will have already answered questions your buyer has raised of you, but you will also be asked to give them certain assurances in the sale contract and if you cannot give those assurances you need to formally notify your buyer of why. This is disclosure and takes the form of a disclosure letter. To pull this together, we, working with you, will often have to re-visit everything that has gone before including enquiry responses, property and employment aspects, any changes in the business that may result from the deal and any required consents. Disclosures could impact the payment terms or deal structure depending on the buyer’s response to the information therefore these elements will also likely be re-visited a this stage of the process.
Holly Threlfall
On the twelfth day of my sale, my lawyer asked of me …
When do you want to complete?
What do you need to tell your buyer?
What questions do you have on this agreement?
What are your responses to these enquiries?
How are you maintaining continuity?
What about the property?
Have you thought about employees?
What are your payment terms?
What is your structure?
Who else is advising?
Who wants to buy it?
and
What do you want to achieve?
Congratulations. You have made it to completion of the transaction (and the end of this rhyme!) and this is where you start to look to the date that all of your hard work comes to fruition and your sale concludes. But at this point, not only do we need to ask you when you want to complete, but we will look back on all of the discussions that have come before to ensure that all is in order before we complete. Are there any last minute aspects that need to be notified to your buyer? Do you have any final queries on the deal? Have any responses to enquiries changed or are they outstanding? Are all elements of the transaction structure ready to conclude? Are all advisors satisfied on the deal terms? Is the buyer ready? Crucially, does this deal still achieve what you want to achieve?
So, as you reach the end of your transaction, don’t be surprised if we do re-visit previous aspects or discussions. This is so that we can ensure everything is ready to and lined up for your successful exit.
As we’re on day 12, hopefully now you see why this song is the most apt for transactional lawyers. Transactions will crescendo and we will constantly consider the knowledge of what has come before. It may feel long, and sometimes repetitive, but it is necessary for us to make sure that your goals are achieved and you have a successful exit.
All that is left is for us to wish you a Merry Christmas and, if you are so inclined to sell, a smooth transaction in the New Year!