How to prepare your business for sale in a world of COVID – Jaron Crooknorth of Tayntons Solicitors

By Jaron Crooknorth, company and commercial partner at Tayntons Solicitors 

There are plenty of reasons you may be thinking of selling your business: retirement, poor health, you need a change, you want to cash in on years of hard work.

Or maybe you’re feeling worried about what the post-pandemic future holds for the profitability and success of your business – writes Jaron Crooknorth, company and commercial partner at Tayntons Solicitors.

Many business owners are also anxiously awaiting the Chancellor’s November 2021 budget. The government is sure to start clawing back some of the billions it has dished out in furlough pay and other financial support for businesses.

This could include an increase in Capital Gains Tax rates, adding an urgency to getting business sales through before the autumn.

Whatever your motives, one thing’s a given: getting your business ready for sale now is key to a successful, stress-free process. Too many owners do too little too late before putting their business on the market. The result:

  • Extra work for you once you’re in the thick of buyer due diligence and negotiation
  • Reduced bargaining strength, when the buyer finds skeletons in your corporate cupboard even you didn’t know about
  • Heightened anxiety
  • Increased cost
  • So what are some of the steps you should be taking now to get your business ready for sale?

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    Bring in professional help

    This could be the most important transaction of your life. Don’t imagine you can do it on your own. You’ll need an expert team to support and advise you on the financial, legal and commercial aspects of the deal – and any specific COVID-related risks you should be aware of.

    Spend time finding the right advisers:

  • Ask for recommendations from other business owners who have recently bought or sold their business
  • Make sure your advisers understand your sector and quickly grasp how your business works, its strengths and vulnerabilities
  • Remember: cheapest is not always best
  • Spring clean your business

    You want your business to be attractive to a buyer. It’s a bit like having the in-laws round – you don’t want the buyer to pick up on any ‘untidiness’. Go over your business with a fine toothcomb and look for areas that may cause a purchaser concern.

  • Policies and procedures
  • Supplier vetting and onboarding
  • Outstanding litigation/unsettled disputes
  • Accounting records and internal governance issues
  • Polish the silver

    You know what’s great about your business. In this time of COVID, the world is reeling from a huge economic slowdown. Business confidence is still shaky. You may receive lower offers than you would have got two years ago.

    So it’s essential you flag up your business’ prize assets. What differentiates it from the competition? Where does its real value lie? What makes it an irresistible bargain? How has it fared during the pandemic?

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  • Profitability records – they need to show how you’ve weathered the COVID storm.
  • Awards and success stories – what innovation and smart thinking have you used to overcome the challenges of COVID?
  • Key customers – how have you retained them during the pandemic?
  • Keep your key staff on board

    Senior employees, thought leaders, technical superstars – show them off, and tie them in with incentives. You need them to support the business pre-sale and during negotiations.

    And you want to add value to the business by having them stay on afterwards (although much of that will be up to what the buyer is prepared to offer them).

    A strong management team is also critical to keep the business flying during the disruption of the sale, and to navigate the disposal process safely through to completion.

    For help and advice on your getting your business ready for sale, and for other solutions to your corporate or commercial law problems, email info@tayntons.co.uk or call 01452 222340.

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