Selling a company is a major milestone for any business owner. It can represent years of work, investment and growth, so ensuring the process runs smoothly and the business achieves the best possible value is essential.
However, many sales become delayed or complicated because businesses are not fully prepared for the level of scrutiny involved. Buyers will want a detailed understanding of the company’s legal, financial and operational position before committing to a transaction. This process, known as due diligence, can uncover issues that slow negotiations, reduce the purchase price, or even derail a deal entirely.
The good news is that many of these issues can be addressed well before the business goes to market.
Here at stevensdrake solicitors, we regularly advise owners who are preparing for a sale, and one of the most valuable steps is starting preparations early. Getting the right structures, documentation and records in place can make a significant difference to both the speed of the transaction and the final outcome.
Why preparation matters
A buyer will typically carry out a detailed review of the company before completing an acquisition. This will often cover areas such as:
If documentation is incomplete, inconsistent or difficult to locate, the buyer may raise concerns or request additional protections in the legal documentation. In some cases, this can lead to renegotiation of the price or additional warranties and indemnities.
Preparing early allows potential issues to be identified and addressed before the buyer’s advisers become involved.
Common areas that require attention
In practice, there are several areas that frequently cause delays in company sales.
For example, statutory registers and share records are often overlooked during the life of a business, but become critically important when proving ownership of shares during a transaction.
Financial information is another key focus. Buyers will want confidence that accounting records are accurate, complete and up to date, and that any security arrangements, guarantees or liabilities are clearly documented.
Legal due diligence can also highlight gaps in contracts or undocumented commercial arrangements. Many growing businesses operate on informal agreements with suppliers or customers, but buyers will often expect these relationships to be formalised.
Employment records and property interests can also come under close scrutiny, particularly where there are key employees, pension arrangements or leased premises involved.
Taking a proactive approach
One of the most effective ways to reduce risk during a sale is for sellers to carry out their own internal review before approaching buyers.
This allows potential issues to be resolved early, documentation to be organised, and advisers to structure the transaction in the most efficient way from both a legal and tax perspective.
Even relatively small steps, such as ensuring statutory registers are complete or confirming that key contracts are signed and dated, can make a significant difference to how smoothly a transaction progresses.
Download our guide: Preparing Your Company for Sale
To help business owners understand the process in more detail, our corporate and commercial team has prepared a practical guide outlining the key areas to consider when preparing a company for sale.
The guide includes:
Click here to download the full guide.
If you are considering selling your business or would like advice on preparing for a future exit, our corporate and commercial team would be happy to help.
Nusrat Qureishi joins us as the Head of Corporate & Commercial Law. She is a corporate commercial lawyer with more than 20 years’ experience with particular expertise in the sale and purchase of businesses and companies, as well as the establishment of partnerships and other joint ventures.
Having trained and worked for many years for a City Law firm, Nusrat has a wealth of experience of working on high-value and complex corporate transactions. Her experience extends to advising on mergers, investment, shareholder, restructuring, banking and re-financing and corporate governance work. Her clients have included entrepreneurs, owner-managers, mid-market companies, SMEs, PLCs, international corporates, private equity, banks and financial institutions, joint venture parties, LLPs, partnerships and individuals.
Client service is highly valued by Nusrat who invests time to gain a real understanding of her clients’ needs to meet their goals as effectively and commercially as possible. She aims to be involved in the preparation of a business for sale or purchase from an early stage to ensure that the process runs smoothly and without unnecessary risk, helping to reduce both time and cost for her clients. Her experience allows her to advise companies on strategy – enabling entities to realise the next stage of their growth plans and also support more sophisticated businesses to achieve their commercial objectives.
Nusrat’s approach is totally consistent with the ethos of stevensdrake where client satisfaction is valued together with the provision of a high quality service.
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