Top Tips to Selling a Company   

People say that getting married and buying a new home can be the most stressful times of your life however selling a company must be up there also.  Clearly it is really important to get certain aspects of this right from both a financial point of view but also a legal point.  Getting the legality of this wrong could leave you in a spot of bother.  Here are some of the different tips to consider in this process:


Getting the valuation of your company correct is one of the most important factors in this process.  Effectively, if you value your company too high you will struggle to sell it and if you value it too low then someone will snap it from you and you could have earned a lot more cash.  There are many formulae and methods to value your company based on your end of year finances and assets however it may be an idea to get an external company to do this for you.  With Hilton Smythe – business sales is one of their specialist subjects and they can help value your company.  Their valuation service actually doesn’t cost a penny and is completely confidential.  If you then decide to go ahead and sell the company they will then hope you use them for this service where they can help you right through the process.

Legal Documents

There is a lot of legal documents that is required to be prepared and signed in order to make the transfer of a business successful.  This includes making sure that the following are up to date:

  • Company end of year accounts and are filed with HMRC / Company House (and there is no arrears).
  • VAT returns – If your company is VAT registered then all the documents are up to date and the latest VAT return has been paid to HMRC.
  • Employee Pensions – A lot of changes on this in the past few years. There is a need to clearly ensure that all the company employees are enrolled or have opted out and all pensions are up to date and paid.
  • Shareholders Certificate – Ensure that all the current details in relation to who owns the company and who are the named directors are up to date. Simple things like the persons up to date address is required.

Employee Uncertainty

If you are about to sell your business then it is extremely important that you are open and transparent with your employee as the uncertainty can be unsettling for individuals but also could make them want to jump ship to another company immediately.  With the sale, you may want to try and negotiate a level of job security for employees (however this may not be possible due to the fact that the new owners may want to make a complete restructure).  By not keeping your employees up to date on their job security could end up with you having a rebellion on your hands.