Thinking of selling your business? Neil Jones, corporate solicitor at Ansons LLP lists the top ten problems seen by solicitors when acting for owner-managed businesses.
1. shareholders – long forgotten family members may be minority shareholders who are no longer in touch with the company for sale, and a buyer will not want to inherit them with the business.
2. staff – family or friends may be on the payroll, despite never having, or no longer serving, any real purpose in the business.
3. family assets – holiday homes, sports cars and antiques that are not needed by the business should not be on the balance sheet.
4. management team – lack of succession planning means there will be no one who can run the business for the new owner.
5. contracts – a lack of formal contract documentation committing customers and suppliers to the business, will be a cause for concern.
6. cash – too much cash left on the balance sheet, will cause problems for tax planning and may confuse the true value of a business.
7. dividends – last minute and ad hoc dividends can cause concerns for a buyer in relation to the working capital requirements of the business.
8. Directors’ loan accounts – historic loan balances that have not been cleared may now represent potential tax and cash flow issues.
9. tax schemes – “clever” tax planning may frighten a buyer who may fear they will be challenged or investigated by HMRC.
10. bonuses – commitments to large employee bonus payments that have been paid, even when targets have not been hit, may create unrealistic future expectations.
These problems all need to be dealt with in advance, if you wish to maximise the value of your business when you put it on the market.
An experienced corporate and commercial lawyer will assist you to sort out these issues before a buyer can raise them as an excuse to reduce the price, or not to proceed.
For further information, contact Neil Jones on 01543 466660 or email email@example.com.