United Kingdom
It is a sad fact in life that the Covid 19 outbreak has left many companies in a difficult state. Some owners are considering selling in a desperate attempt to make up for lost earnings. In this situation, it is very important that the seller be careful. Quick decisions should be avoided as potential buyers actively try to take advantage of the situation and protect companies at low cost, advises Neil Jones, head of the corporate and trading team at Ansons Solicitors.
Jones, pictured right, suggests that these buyers may try to renegotiate certain terms to the detriment of the seller if agreements have already been made. So if you are firmly convinced that the sale is right, it is important that you always exercise caution in the process.
After all, the buyer invests in the long-term profitability and potential of the business, which must be reflected in the terms of the contract. Therefore, sellers should take measures to protect themselves, e.g. B. Require advance payments to avoid problems later.
Easy steps to success
If you are sure that you want to sell the company, it is important to follow a number of clearly defined steps, including securing the positions of the employees, minimizing personal tax liabilities and deciding what expert advice is required.
When you seek expert help, it is critical that the professionals you select have the experience to achieve a positive result in your industry.
From there, it's about getting the best possible offer. This can include cleaning up loose ends, selling unused property or equipment, positioning larger purchases, or implementing strict inventory management and credit controls to maximize working capital.
Currently, sellers are more likely to be addressed directly by buyers who want to offer a rating that maximizes their chances of securing the deal as cheaply as possible. The seller needs to assess the status of the buyer as carefully as normal to understand if he can fund the purchase.
Although the current climate can encourage sellers to speed up due diligence, it could play into the hands of many buyers who want you to hurry through the business.
While Covid-19-19 is blocked and the likely economic uncertainty that may result from it, only natural buyers can focus on issues such as insurance, supply chain risk, business continuity, and health and safety policies for employees when performing due diligence .
From the seller's perspective, it is important to be open and transparent as this will help you build trust with potential buyers and protect yourself from future demands.
In the event of deferred pricing mechanisms or earn-outs, the seller must ensure that they are fully covered in relation to the effects of Covid-19 on his business.
Selling may be the only option for some business owners, but people need to be careful. Covid-19-19 has created market conditions under which speculators feel they can bargain, but wise sellers can still structure any agreement to ensure that the business they have worked hard to build is not undervalued.
About the author: Neil Jones is the leader of the corporate and trading team at Ansons Solicitors. He advises on a variety of business contracts and transactions, including mergers and acquisitions. Corporate and business sales; and corporate restructuring.
About the firm: Ansons is a leading law firm with offices in Cannock, Lichfield, Halesowen and Sutton Coldfield, providing businesses and individuals with a full range of legal services. The services range from advice on commercial real estate and corporate matters through family law and wills to estate and tax planning.
