If you have worked hard to build a business but are now inching towards your golden years, you may be thinking about what to do next. You want to avoid shutting the company for many different reasons and, in an ideal world, should find an ideal buyer. But how can you make sure that the business is in good shape to sell, and how can you protect yourself and your legacy?

Crafting Your Approach

Your first step should be to make a fair and honest assessment of the organisation and work with a lawyer that specialises in this field to arrive at a valuation. Businesses like yours are often put on the market to invite offers, but valuations should be based on a multiple of the average net profit. In this case, you would add the net profit from each of the last three years and average it before applying a multiple based on your net profit percentage. The more successful the business, the higher the multiple, and it is also tailored according to the industry.

Formalising Agreements

But you must make sure that the business is ready for sale. This is where a lawyer will come into their own, especially if some of your paperwork leaves a little to be desired. For example, you may have worked with certain customers for many years on the basis of a handshake, and the same approach may apply to the suppliers as well. However, this may not be good enough for a prospective buyer who will want to see continuity and formal agreements in place. A lawyer can help you draw up these agreements while working with the utmost confidentiality.

You don't want to let any of your customers, suppliers or even employees know that the business is up for sale until such time as the deal is ready to go through. In this case, you can come up with a sensible reason to ask for formal signatures. You could, for example, say that you need this documentation to get permission from your bank to extend a credit facility.

Sales Agreement

Once your lawyer has helped you to get all the paperwork in order, they can then draft and negotiate the sales agreement. They can work with the other party's adviser as you move closer to striking an agreement.

Next Move

Talk with a business lawyer who specialises in acquisitions to get the ball rolling.

For more information, contact lawyers near you.