THE PROCESS OF SELLING A COMPANY

The traditional/usual steps involved in selling a company are as follows:

1)    Groom the Company for sale and clean up the Balance Sheet

2)    Finalise the Completion Balance Sheet and the Adjusted EBITDA

3)    Fix the Asking Price based on the Balance Sheet and Adjusted EBITDA

4)    Draft and issue the Sales Memorandum

5)    Deal with Purchaser enquiries

6)    Ensure Purchasers have funding capability

7)    Obtain Offers

8)    Accept an Offer

9)    Negotiate and agree Heads of Terms (HoT) between Purchaser and Vendor

10)Agree a timetable for completion

11)Purchasers begin commercial and legal due diligence

12)Purchasers begin accounting due diligence

13)Purchasers’ solicitors issue draft Share Purchase Agreement (SPA)

14)The terms of the Share Purchase Agreement are negotiated and agreed; it includes Vendor Warranties; TUPE obligations; Tax Deed – warranties and Indemnities; Payment terms including any escrow payments or deferred payments, earn-outs etc

15)Remove personal guarantees with Bank; obtain Bank’s approval to sale if required.

16)Exchange & Completion of the Agreement is usually simultaneous primarily because the trading of the company is a moving target and the warranties and completion accounts are only valid and applicable at the time of completion

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