Preparing Your Business for Sale: Legal Steps to Take Early to Maximise Value and Reduce Risk

Selling a business is a big decision, and not one to be taken lightly. Whether planning for retirement or succession, or an exit strategy, there are a few simple steps that can be taken to ensure the process runs as smoothly as possible. 

We spoke to Svetlana Gooderham, Associate Solicitor in the Corporate and Commercial Department at Woodfines, to find out the legal steps before selling a business, that owners should consider.

What is one of the biggest mistakes that people can make when preparing to sell a business?

Planning is key. 

“Get a solicitor involved in the process at the earliest opportunity – even before you’ve found a buyer,” comments Svetlana. 

Allowing time to prepare, run preliminary due diligence and rectify issues before the buyer discovers them will maximise the value and cut down on delays throughout the process. 

Getting everything in order means that you can enter the transaction with confidence, the momentum is maintained and the likelihood of renegotiation is minimised. 

“It’s like selling a house, you’d tidy things up and fix the little snagging jobs to get it in the best shape before you start viewings.” 

The average timescale required is typically three to four months, but can extend to six months or more depending on the negotiation pace.

Getting prepared sooner rather than later can help speed up the process

Problems uncovered during due diligence. Unresolved legal, contractual or regulatory issues can not only delay the transaction, they can reduce the purchase price and even cause a sale to fall through.

When selling or buying a business, there are a few key steps to take to ensure the process runs as smoothly as possible.

Working with an experienced solicitor means tapping into their knowledge and expertise, leaving you to do what you do best: run your business. 

“We do it every day, so we know what to look for. It’s our job to protect your commercial interests throughout the whole transaction.”

• Identify potential issues before they become barriers 
• Assist with documentation preparation 
• Support negotiations

Selling a business in the UK has changed a lot over the last few years

Since interest rates rose sharply over the last few years, acquiring businesses has become more expensive, with the knock-on effect of more scrutiny of deals and longer sale processes.

The National Security and Investment Act 2021 introduced new rules allowing government review of acquisitions in sensitive sectors such as AI, communications, defence and data infrastructure – with some transactions requiring formal notification before completion.

Things to consider before finding a buyer for your business

Selling a business isn’t about simply finding a buyer, it’s about ensuring that the business is prepared for scrutiny and financial and legal documentation is organised and to hand. 

‘It’s really about tidying up and making sure everything has been done properly.” 

By reviewing key contracts, shareholder and partnership agreements and ensuring regulatory compliance, licences and permissions in plenty of time, keeps the transaction flowing smoothly.

Frequently asked questions

How early should I contact the Woodfines’ Corporate and Commercial team?

Even if a business sale isn’t on the immediate horizon, we’ve had clients who have contacted us for a business audit to get peace of mind that should they want to sell in five years time, then they’re on the right path.

I’ve already found a buyer, surely that’s 80% of the deal done?

We’d recommend not to sign anything until you’ve had a solicitor look through it. Often renegotiating previously agreed terms can slow things down even further and impact the final price you could receive when selling.

What’s the difference between a share and an asset sale?

Put simply, in a share sale, the buyer acquires the whole company – including all assets, contracts, employees and liabilities. In an asset sale, the buyer may select the specific assets they want and exclude specific liabilities.

I’m looking to buy a business, do you also help with that?

Yes. We support buyers and sellers of businesses, although obviously not as part of the same transaction. So, if you’re looking to buy a business or sell a business, the Woodfines team can help.

Are you thinking of selling your business?

Whether you’re considering selling your business or are simply looking for more information on how to get your business in the best possible shape to make it attractive to buyers, speak with our Corporate Commercial team today. 

We’ll provide you with clear and practical support from initial preparation through to completion. We’re here for you.

Make sure you get the best price for the business you worked hard for by contacting Woodfines Corporate Commericial team today.