Oury Clark A new approach to professional services - Quick reference guides from our wealth of knowledge

Key Contact

• Zubin Maini

• Qualifications: BA (Hons) CA
• Position: Partner OCCF
• Phone: +44 (0) 1753 551111
• Fax: +44 (0) 1753 550544
• Email: Zubin.Maini@occorporatefinance.com

Most businesses are not managed with the intention of ever being sold and accordingly they are rarely ready for sale when the decision is made to sell. You will improve the chances of getting the best price and most advantageous terms if you take the time to get the business ready for sale.

Here are some of the issues that will in all likelihood have to be addressed:

• Price expectations – let’s understand these at the outset
• Do you want to remain involved? – do you want to retain a shareholding or have your exit over a period of time?
• Getting the right advisors in place (financial and legal).
• Separate meaningful management accounts and key performance indicators for the business being sold.
• Specific budgets for the business being sold – good insight into potential pipeline.
• Board minutes should record missed opportunities – good for a buyer to see this.
• Management of working capital – this should be tightened to maximise excess cash that can be extracted pre-sale.
• Any marginal activities that are loss making should be closed – profits need to be maximised.
• General clean up of the accounts – eg provisions taken on bad debts, intercompany loans repaid, personal assets extracted and personal liabilities discharged, no outstanding tax issues etc.
• New contracts for what was historically inter company trading.
• Cost savings programme – good idea to have a formal programme for which someone is responsible. Also have the existence and progress of this programme minuted at board meetings.
• Statutory books should be up to date.
• Find share certificates.
• Have signed and up to date copies of important contracts, leases, finance documentation, service contracts for key staff, licences, permits, planning permissions and other third party consents.
• Ongoing legal actions involving the company or employees – let’s be aware of these at the outset and see if any can be resolved pre-sale.
• Full understanding of likely separation issues (eg shared services).
• Employees – have the right staff in the right entity before the sale process commences.
• Directors and other key staff – how should they be told? – might need to consider putting in place some incentives to encourage their support. Have appropriate service contracts been agreed?
• Pension rights for staff (if appropriate).
• Transactional tax issues – mitigating steps re CGT, inheritance tax.
• Identify the “deal breakers”