Back to insights

Selling Your Business? Consider These 4 Things First!

You have built your business for years and poured blood sweat and tears into the value creation.  Now ready to sell, be sure not to waste all your efforts by stumbling over the last hurdle and rushing the sale process.

There are several important issues that need to be considered when selling a business. You need to consider them meticulously, and make sure your sale of business agreement accurately reflects your agreement with your purchaser in relation to these important points.

  1. Selling Shares or the Business?

 

Are you selling all the shares in the company or will you be selling the business as a going concern? It is important to know the difference between a sale of business as a going concern, a sale of assets and a sale of shares or member’s interest, before concluding a sale agreement.

 

This is important, because if intend on only selling a certain part of your business but enter into an agreement selling your shares, you may end up with quite surprise down the line. It will also play a significant role in relation to the type of warranties and guarantees you will be required to give and the responsibilities you will have during the sale and handover process. 

 

  1. What is being sold or transferred?

 

If you are selling the business as a going concern, be sure to specify in detail what is in fact being transferred and what not. A detailed list asset (tangible and intangible) incorporated into the sale agreement, will certainly assist with avoiding disputes in the future.

 

  1. Purchase Price

 

This seems rather obvious, that the purchase price would be the first point which would be negotiated. Careful consideration and though however need to be given to the settlement terms, when it is paid and how it is paid etc. In many instances the purchase price can be a fluctuating figure dependent on wide variety of variables that could come into play until date of final payment i.e. a contract with an important client being terminated, a deal falling through or even a lucrative deal becoming final.

 

  1. Handover Period

 

Your purchaser may need you and other key members to smooth out the handover and be involved with the business for a period following a sale. Be sure to negotiate the timeline in such a way that you can step away from the business after its expiration without any risks of litigation ensuing. Also, you should consider how your involvement post-sale affects the purchase price and whether you should in fact be negotiating i.e. a consultancy fee

 

Closing

 

Selling your business involves more than simply finding a purchaser and preparing and signing the sale of business agreement. It can be a complicated process and it shouldn’t be rushed nor need to be a tiresome dragged out process which causes deal fatigue leading to the sale falling through. This is where business attorneys come in handy, helping you negotiate the important terms, managing your risks and facilitating the sale from start to finish.

 

If you require assistance with preparing a sale of business agreement, or another part of the sale of business process, contact us on 021 9488 273 or send us a mail at info@oreillylaw.co.za.