If you are considering offering your company it is best to begin getting ready for it at an early phase and at least a few months prior to the desired date. In general there are 2 methods of selling a company or company. The very first is to sell the shares in a company. The second is to sell the business as a going issue which includes the assets and goodwill of the business. This article applies to both scenarios.
Any seller wants to ensure that they get maximum value for the company, which is payable as quickly as possible and with minimum continuous liabilities including warranties or indemnities. In order to maximize the value of your business and minimize the threat of any continuous liabilities, it is a good method to examine the financial, legal and commercial aspects of your company prior to sale to ensure everything is in order and fit for sale.
This exercise can either be carried out by yourself or alternatively by a specialist consultant with experience of preparing a company for sale. If you opt to carry out the exercise yourself then you might consider using a Financial and Legal Due Diligence Questionnaire as a guide. These are due diligence documents which are sent out by a potential purchaser to a seller in advance of a sale as part of the reality finding Lawyers That Sue Banks or due diligence exercise.
Once the business prepares to sell you will have to figure out the best way to market it. There are a few options namely you can do it yourself or you can use a corporate broker. If you are thinking about selling the business yourself then you will have the benefit of knowing the marketplace players who might be interested in buying your business. The primary step will be to prepare a brief letter suggesting that your company is for sale. It's crucial at this phase that the receivers of the letter do not know what business it relates to so the letter must be generic and not from an address/email address connected with business. If the recipient is interested the letter needs to consist of contact details so this can be progressed. If the recipient does make contact then the next phase would be for it to sign a privacy agreement prior to disclosure of any more details. This would restrict any more use and/ or disclosure of any secret information connecting to your business.
Additionally you could use a corporate broker. If you plan to do this you need to ask to see some reviews or study of other sales undertaken by the broker. The broker will ask you to sign their terms which you should review carefully and certain matters to think about include the following:
Many brokers ask for an up-front charge at the time of signature of their terms and likewise a commission charge if they successfully sell your business. If possible it is always a good concept to minimize or get rid of the front end charges in favour of the commission fee upon successful sale.
2. If the broker demands maintaining the front end charge then you need to make sure that there is a schedule of deliverables added to the terms so that you understand exactly what services you are getting for the charge. This should likewise include the number of prospective purchasers will be approached.
3. The terms need to be non-exclusive thus enabling you to approach a various broker. If this is the case then you may wish to include a claw back arrangement in the terms consequently allowing you to claw back a few of the up-front cost if you do need to designate an alternative broker.
One point to factor into the fee structure is that the broker normally only markets your business and potentially works out the rate. It is therefore important to determine precisely what in general services will be supplied by the broker and to add the list to the broker's terms.
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Any seller wants to ensure that they get maximum value for the company, which is payable as quickly as possible and with minimum continuous liabilities including warranties or indemnities.
This exercise can either be carried out by yourself or alternatively by a specialist consultant with experience of preparing a company for sale. If you opt to carry out the exercise yourself then you might consider using a Financial and Legal Due Diligence Questionnaire as a guide. These are due diligence documents which are sent out by a potential purchaser to a seller in advance of a sale as part of the reality finding or due diligence exercise.
Jeff A. Bucher
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