Selling a business during the Covid 19 pandemic
If you are selling a business during the pandemic you are probably wondering if anyone is going to buy. You are not alone, there is a great deal of uncertainty around many industries at present, but you should seek some comfort in the fact that there are still people out there looking to buy.
Admittedly most individuals or companies buying established businesses at the moment will be looking at acquiring brands that have been doing well during these unprecedented times.
The coronavirus has affected almost every part of our society. Owners of businesses and their staff are being affected by the closure of many non-essential businesses.
However, if your business has been classified as essential, or it has a strong online presence then it could be snapped up by someone looking to invest in the future of retail.
The Legal Side of Selling Businesses During Pandemic
Your solicitor will need to draft the Asset Purchase Agreement of sales and goodwill. If you are selling a limited company your solicitor will need to draft a Share Purchase Agreement.
You will also need to list exactly what is included in the sale, for example
- Fixtures and fittings
- Name the of the employees being transferred with the business
- Any stock that is included in the sale price
Any prospective buyer will also want to ensure that your business has been valued properly. There will be multiple assets to consider, such as:
- Property value
- Intellectual property
- Turnover
- Staff
Your legal team will ensure sure that the true value of your company is assigned with the assistance of your accountant.
Your solicitor will need to draft the asset purchase agreement for the sale of goodwill and assets. If you are selling a limited company your solicitor will need to review the share purchase agreement drafted by the buyer’s solicitor.
Once an offer has been made, the buyer’s legal team will conduct due diligence to make sure there are no unforeseen liabilities. Due diligence can be a lengthy process, but it is essential. The buyer’s due diligence enquiries could include:
- The last three years of accounts
- Whether any of your assets are hire purchase
- Whether there are any outstanding claims against you
Buying or selling a small business can be stressful as it is an extremely complex legal process, and during the restrictions, this stress could well be enhanced.
Instructing an experienced solicitor will provide you with the certainty that you will be guided through the process from the outset. Even if you have sold businesses before it can still be a daunting procedure. Kaiser Solicitors are here to help. We will give you sound advice and keep you informed every step of the way.
