Selling your business can be a stressful time and unless you’ve done it before, it’s hard to know what to expect or what’s required to get the right result.
We’ve put together the top issues for business owners or investors to maximise their results.
Control the flow of information
During the sale process it’s not unusual to be asked for a myriad of information about your business, its performance, and for your financials.
Just remember that not all prospective buyers are buyers – many will be looking for market knowledge and intelligence. It’s important to cascade information through to prospective buyers as required to limit the potential of over-sharing with competitors. Generally, sensitive information should only be released under due diligence once key terms have been agreed.
Warranties and indemnities
Warranties and indemnities are a standard part of most sales agreements to protect the purchaser against declining performance and significant changes in conditions from what has been declared.
It is essential that you understand what you are signing up to even if the chances of the trigger event occurring are slim. This includes limiting the dollar quantum of any indemnity and its time period. In most contracts if you disclose information during the due diligence phase a warranty claim cannot be made against you – there can be an art in disclosure!
Restraints
Restraints are also a common part of a sale of business process particularly where the sale includes goodwill.
Restraint clauses prevent you from selling your business then immediately starting a new business or becoming a part of a competitors business using the goodwill you established. Where restraint clauses are involved, it’s important to understand how long you are going to be out of the market for.
You have worked hard, made sacrifices, put in the sweat, blood and tears and are possibly thinking it’s time for a change. Whether you are farmer or in business the questions will likely be the same. Over the years we have assisted many people to sell their business and farm and provide for a retirement that they wanted. We can assist you to do the same.
