As the chancellor’s 2016 budget announcement brought encouraging news for businesses, anyone thinking of buying or selling a business in 2016 will need to sharpen their game. Here are 10 tips to make sure you are prepared and ready for action – by Neil Jones, a partner in the corporate team at Ansons Solicitors.

As preparation is key, the Ansons corporate team have put together 10 tips to help you buy or sell your business in 2016: 

• Deposit – The purpose of a deposit is to offer the seller some security that the buyer is committed to the transaction and, in certain circumstances, cover the seller’s reasonable fees should the buyer withdraw for no justifiable reason. A deposit should be proportionate, reasonable and refundable in certain circumstances, for example, if a seller has misled a buyer or provided inaccurate information, or the seller withdraws from the sale without good reason. Before signing a deposit agreement, we recommend that a buyer has the terms of the agreement reviewed by a specialist corporate lawyer to ensure that they understand the risks involved and are properly advised.
   
• Exclusivity – Often used in conjunction with deposits, the purpose of this is to reduce the risk of wasted professional fees and management time for a prospective buyer by giving the buyer comfort that he can incur costs in the knowledge that any rival bidders have been excluded from the process. The period of exclusivity is often negotiated; a buyer requiring as long as possible and the seller wanting to keep the period concise to keep the buyer under pressure and focused on moving the transaction forward. This should be discussed at the outset and the buyer should ensure that an extension is sought if the period is likely to expire.
   
• Funding – Cash buyers are uncommon and therefore buyers will often have to turn to separate funding, often a bank or specialised lender. Some of the large institutional lenders have specialist teams who deal with transactions in particular industry sectors and buyers would be sensible to approach these wherever possible. Shop around to get the best deal as lenders often have different focuses on strategy and risk. Some may have better deals for first-time buyers, others better rates for someone looking to increase their portfolio. It may also pay to consider refinancing on further acquisitions.
   
• Regulations – There may be a number of regulatory aspects to consider in any transaction and experienced advisors will be able to advise you as to what applications or notifications will need to be made and at what point during the process.
   
• Property – Property is a key asset in most businesses. A lender will place particular emphasis on the importance of the property from a security point of view so it is vital to carry out thorough investigations, including searches and surveys, to ensure that there are no issues in terms of its title and condition.
   
• Negotiation – A buyer and seller will need to negotiate on a number of commercial points. It is sensible to take a pragmatic and balanced approach when negotiating a contract. Point scoring or trying to win every argument can distract clients from what is really important, delay the deal and ultimately increase your costs. Specialist advisors will also be well placed to advise you on the key commercial points and how best to protect yourself.
   
• Employees – Employees are the heartbeat of any business and it is an area that should be handled with care by both a buyer and a seller. Employees are protected by the Transfer of Undertakings (Protection of Employment) Regulations. Sellers are advised not to agree to any changes to their employees as part of negotiations without speaking to a solicitor first. Equally, buyers should not assume that they can walk into a new business and dismiss employees or change their terms of employment. Failure to comply with employment law can lead to significant claims by the employees against both the seller and the buyer.
   
• Data protection – Data protection is currently subject to great scrutiny. It is therefore essential that businesses are aware of their obligations under the law and are registered with the Information Commissioner’s Office where appropriate. We have come across a number of businesses that are not aware of and not in compliance with their data protection obligations, which, in certain circumstances, can lead to criminal prosecutions and significant fines.
   
• Due diligence – A prudent buyer should carry out thorough due diligence into all aspects of a business including finance, tax, employees, contracts, complaints and suppliers. A seller can prolong a transaction by not providing full information when requested, which can also make a buyer wary. Preparation is key here and keeping an organised record of all contracts and paperwork is a simple but effective way of achieving this.
   
• Advisors – When looking to acquire or dispose of your business it is best to use advisors who not only have knowledge of your business activity but who also specialise in the buying and selling of businesses. Look at sales agents, accountants and solicitors who have worked in your industry before and have experience in carrying out transactions as they will be able to give you the specialist advice that you require, whether buying or selling. This will enable you to obtain the maximum value for your business and will hopefully save you time and, more importantly, money and make for a smoother process. 

For a confidential discussion about buying or selling a business contact Neil Jones at Ansons Solicitors in Cannock and Lichfield, on 01543 431 184 or email njones@ansonsllp.com.