SELLING A BUSINESS 1 Before you make a deal with any pote

Man: Good morning, ladies and gentlemen. I’m honorued to have this opportunity to talk to you. My name is James Clair, and I’m Chief Executive of the Institute of Marketing Research. My talk today is about selling a business. If you plan to sell your business, be careful. There are an enormous number of traps awaiting the inexperienced seller. Before giving out any information about the business to any potential purchaser, make sure they have signed a confidentiality undertaking—that is, a document promising not to make confidential information public. You do not want a potential buyer using this confidential information either in the course of negotiations or after negotiations have broken down. Many confidentiality letters, however, have no legal value, so taking appropriate advice is recommended. You should also consider your strategy for informing your staff of the proposed sale. Most business owners want to keep the sale secret from their employees until the deal has been completed or at least until negotiations are fairly advanced. This can be difficult, though, and if staff find out about the sale, it can unsettle them. In addition, you will need to produce a considerable amount of information about the business and its running; for this you will require the co-operation of senior management, who will therefore need to be informed of the sale. When corresponding with a potential purchaser marks everything "subject to contract" . Contracts can be made accidentally and you do not want to be committed until a formal contract, including all of the relevant terms, has been negotiated and signed. To avoid this, many people negotiate a summary document which briefly sets out the main conditions of the sale. These documents can be useful because potential areas of dispute or disagreement can be seen in advance. They should be short and simple, and full arrangement should be negotiated with the buyer as soon as possible. Do remember, however, that a summary rarely deals with all the points for discussion which are going to arise in the course of negotiations. Make sure all your paperwork is in order. A buyer will want to see vast quantities of information and documentation on the business. It is vital therefore that you ensure all insurance policies, bank statements, finance documents, and employment, supplier and customer contracts are well ordered and up to date. This will save everyone a lot of time. In addition, make sure that all staffs have up-to-date contracts of employment. An employer must, by law, issue statements of employment to all employees within two months of their starting work. These protect both the employer and the employee, and mean that there is certainty about those terms and conditions. Even if you fail to issue them the buyer will still expect you to be able to identify with certainty what the terms and conditions are The absence of written contracts makes that much more difficult. You may also need the approval of people entirely external to the business for the sale to take place. The most frequent example of this is when significant pieces of machinery and equipment are subject to financing arrangements, and the consent of the financier is necessary. Getting such agreement generally takes time, so you will need to move quickly if a buyer wants it done before completing the deal.