Q: I would like to retire and sell my business. What are my options?

You may be able to sell your business to another trade buyer who is looking to expand into the region, or to a local competitor who wishes to grow their business operations.

If you have senior staff members who would like to become owners, a ‘management buy-out’ may be an alternative option, potentially supported by bank funding.

Another option may be to establish an ‘employee ownership trust’, which buys the business on behalf of all the business’s employees and pays you the purchase price over a number of months or years from the business’s future profits. Employee ownership trusts are becoming more popular, although they are more suited to larger businesses.

Q: What are the steps in a sale process?

Frequently, stage 1 is for the parties to sign ‘heads of terms’, setting out the main commercial terms of the transaction. This helps ensure that the parties are agreed on these from the outset. The parties may also sign a confidentiality agreement covering the business information they disclose to each other during negotiations.

There typically follows a ‘due diligence’ exercise, in which the buyer carries out a thorough investigation of the business, including its assets, liabilities, profitability, property arrangements, material contracts, employment issues, regulatory requirements and any current disputes or litigation. On a management buyout this exercise may be limited, since the managers will already have a good understanding of the business (although if a bank is providing funding, the bank will usually require a detailed due diligence exercise).

Usually, the sale and purchase agreement is negotiated in parallel with the due diligence. Occasionally, third party consents to the sale may need to be obtained (e.g. from counterparties to any material contracts which are being transferred to the buyer).

Q: How long does the sale process take?

Every transaction is different. But in our experience, most transactions take around 3 months.

Q: Who can I contact for more information?

If you would like further information, please contact Catherine Byers in our corporate team on 01970 343330 or via email at [email protected]