When you sell or transfer your business, the buyer will carry out detailed investigations known as due diligence, to make sure they fully understand how the business has been run and whether there are any issues with it.

As an owner-managed business, you are often so tied up with marketing, sales and service delivery, it is hard to keep on top of compliance and paperwork. The trouble is that if you don’t do that and a potential buyer finds issues within your business, at best, give them an opportunity to reduce the amount of money they will pay for it. Something known as “price-chipping”. At worse this can threaten to derail the whole deal.

For this reason, we recommend that you carry out a thorough audit of your business BEFORE you allow a buyer access to it. That way you can find any problems before they do. And more importantly fix them, so everything is squeaky clean and tickety boo when the time arrives.

We have listed some of the things below that apply to most businesses. There may be others if your business depending on what sectors or specialisms there are within your business.

• Contracts – part of the value within our business are within the relationships you have with clients and suppliers. Buyers will want to see copies of your terms and conditions and any long-term contracts or supply agreements. Make sure you have these and read them first to check they are correct and put you in the best legal position possible. If not, get them re-written and signed up to
• Claims and disputes – the Buyer will want to know whether there are any issues within the customer and supply relationships. A buyer doesn’t expect perfection here, but it is important to know whether there are any problems with these groups of people, show a pro-active response to dealing with any issues and keep good records
• Intellectual property – Goodwill is another important area. Makes sure that your branding, including any names or logos are properly registered
• Employees – in most cases, employees will transfer with the business, so it is important again to check you have complied with all legislation and have good records of all your staff, their benefits and length or employment etc.
• Assets – these are also where value lies. Buyers will want a good inventory and to know whether any of the assets are charged to banks or other lenders
• Finance – this is probably the most important area. Information needs to be up-to-date and accurate. Buyers will want to see previous accounts and up-to-date management accounts. And know that all taxes have been paid

Selling your business is exciting but can also be extremely stressful. Do talk to us at AYL if you are thinking of going down this path. We can support you and make the whole process as easy as possible, making sure you get paid for all the hard work you have put into building your business.