Commercial Law: How To Add Value When Selling A Business

Commercial Law: How To Add Value When Selling A Business

Selling a business can be a drawn-out and complex legal process.

Even large well-established companies can have underlying issues that only become apparent when an owner is looking to sell. These issues can devalue the business.

Else Solicitors commercial law experts have outlined six tips to help you add value to your business before you sell it.

Selling A Business Tip One: Review & Secure Your Business’s Contracts

It is fundamental to address provisions such as payment terms, duration, termination rights, and liabilities in contracts with your suppliers or clients. For a business in which the main assets are its contracts with its clients, it is useful to ensure that on a business transfer that the contracts do not simply terminate. A business should also ensure that it can transfer the rights and obligations to a successor.

Selling A Business Tip Two: Review & Secure Employment Contracts

Simple provisions should be considered including confidentiality, valid and binding restrictive covenants preventing or deterring employees setting up in competition, soliciting clients or other employees, and ultimately undermining the businesses.

Selling A Business Tip Three: Review & Secure All Shareholder / Partnership Agreements

Pre-emption rights, exclusion clauses, binding sale clauses, push and pull, drag along and tag along rights should all be addressed pre-sale to avoid future issues.

Selling A Business Tip Four: Review The Status Of All Property

You should ask yourself who owns the business property, the business or the owners? It might be wise to transfer of property from an owner to the business. In some cases it may be more tax efficient to transfer the property to a pension fund.

Selling A Business Tip Five: Protect The Business’s Intellectual Property

Trade mark the name and logo. Patent your inventions. Furthermore, a business should ensure that it does not give away its intellectual property in its work or products. It should retain ownership of rights in its agreements with customers and in the contracts of employment with its employees.

Selling A Business Tip Six: Attempt To Recover All Business Debts

Debts owed to the business are ultimately assets of a business. Bad debts (when the debt has been determined as unlikely to be paid off) are seen ultimately as losses to a business. It’s obvious that both can affect the value of a business.

If you really want to add value to your business you should examine all the legal risks as early as possible, and run the business as if you were going to sell it tomorrow.

For further commercial law advice please contact the specialist solicitors in our Corporate & Commercial department via 01283 526200. Alternatively, you can send us a message and we will get in touch at a time that suits you.

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