Should I Stay or Should I Go?
- Corporate Law
- 1st Oct 2021
With COVID, Brexit, labour shortages, transport issues, fuel and energy shortages, carbon-dioxide shortages, the predicted food and petrol shortages and the increased costs of living and running a business, could the ‘Winter of Discontent’ be the time to sell your company?
By Rachel Owen
MLP Law
With COVID, Brexit, labour shortages, transport issues, fuel and energy shortages, carbon-dioxide shortages, the predicted food and petrol shortages and the increased costs of living and running a business, could the ‘Winter of Discontent’ be the time to sell your company?
Take stock
Take an objective and honest look at your business. What has the last 18 months meant for your business? Where do things currently stand? What is the position on finances, employees, trading, logistics and other key aspects of the business? Reappraise your business and consider the challenges, what has not been working, how you see the future of your company and how you see your industry moving forward.
Is it time to sell?
If your business is really struggling and you cannot see a way forward, or if you have decided that it is time to move on, retire, look at other opportunities or sail off into the sunset, start to look at your exit plan.
Start Preparing for an Exit
1. Appoint the right people to look after your sale
Have a team of solicitors, accountants and professional advisers that understand your business, your objectives and your commercial needs who can help you and guide you through the sale process.
2. Get your house in order
– Company Health Check – Few business owners are ready for the sale process and advance preparation, away from the strict timetable of the deal itself, can be really useful, particularly as the sellers has to continue running the business during this busy and difficult period
– Accounts / Financials – Consistent monthly management accounts may be more vital to a buyer than a company’s annual audit. Your accountants can assist to determine a fair price for your business or your shares and consideration must be given to what value you are looking to achieve
– Isolate any investment assets from the business
– Lock in and incentivise your employees
– Make use of any tax reliefs
Structuring the Sale and Finding a Buyer
1. Shares or Assets?
The first thing for a seller to consider is whether the sale of the business will take the form of an asset sale (where the buyer purchases some or all of the assets of the company) or a share sale (where the buyer would purchase all or most of a seller’s shares in the Company).
2. Who is a potential buyer?
The exit options that are available to sell your business or your company will depend upon your circumstances, but may involve one of more of the following.
– Third Party Purchaser – you can sell your company/business to another company.
– Management Buyout – the managers within the business can buy the company, or a stake in the company. This is a popular option if you’re are looking to retire, keep continuity in the business or just to incentivise management/key employees.
– Company buyback of Shares – a transaction between a company and a leaving shareholder where the company buys back the shares from the leaving shareholder. It is usual for the Company to then cancel these shares.
– Employee share ownership – You can put in place an employee ownership scheme/employee benefit trust.
– Wind up the Company – if no buyer can be found, no suitable management buy-out candidates or any other suitable options, the company may be wound up.
MLP Law can help and advise you on selling your business. Please speak to our Commercial team and ask for our Guide to Selling your Business on 0161 926 9969 or email us commercial@mlplaw.co.uk.
Take stock
Take an objective and honest look at your business. What has the last 18 months meant for your business? Where do things currently stand? What is the position on finances, employees, trading, logistics and other key aspects of the business? Reappraise your business and consider the challenges, what has not been working, how you see the future of your company and how you see your industry moving forward.
Is it time to sell?
If your business is really struggling and you cannot see a way forward, or if you have decided that it is time to move on, retire, look at other opportunities or sail off into the sunset, start to look at your exit plan.
Start Preparing for an Exit
1. Appoint the right people to look after your sale
Have a team of solicitors, accountants and professional advisers that understand your business, your objectives and your commercial needs who can help you and guide you through the sale process.
2. Get your house in order
– Company Health Check – Few business owners are ready for the sale process and advance preparation, away from the strict timetable of the deal itself, can be really useful, particularly as the sellers has to continue running the business during this busy and difficult period
– Accounts / Financials – Consistent monthly management accounts may be more vital to a buyer than a company’s annual audit. Your accountants can assist to determine a fair price for your business or your shares and consideration must be given to what value you are looking to achieve
– Isolate any investment assets from the business
– Lock in and incentivise your employees
– Make use of any tax reliefs
Structuring the Sale and Finding a Buyer
1. Shares or Assets?
The first thing for a seller to consider is whether the sale of the business will take the form of an asset sale (where the buyer purchases some or all of the assets of the company) or a share sale (where the buyer would purchase all or most of a seller’s shares in the Company).
2. Who is a potential buyer?
The exit options that are available to sell your business or your company will depend upon your circumstances, but may involve one of more of the following.
– Third Party Purchaser – you can sell your company/business to another company.
– Management Buyout – the managers within the business can buy the company, or a stake in the company. This is a popular option if you’re are looking to retire, keep continuity in the business or just to incentivise management/key employees.
– Company buyback of Shares – a transaction between a company and a leaving shareholder where the company buys back the shares from the leaving shareholder. It is usual for the Company to then cancel these shares.
– Employee share ownership – You can put in place an employee ownership scheme/employee benefit trust.
– Wind up the Company – if no buyer can be found, no suitable management buy-out candidates or any other suitable options, the company may be wound up.
MLP Law can help and advise you on selling your business. Please speak to our Commercial team and ask for our Guide to Selling your Business on 0161 926 9969 or email us commercial@mlplaw.co.uk.
About the expert
Stephen Attree
Managing Partner
Stephen is the Owner of MLP Law and leads our Commercial, IP and Dispute Resolution teams which provide advice on all aspects of the law relating to mergers, acquisitions, financing, re-structuring, complex commercial contracts, standard trading terms, share options, shareholder and partnership agreements, commercial dispute resolution, joint venture and partnering arrangements, IT and Technology law, Intellectual Property, EU and competition law, Brexit and GDPR.
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