If you are thinking about selling your business, it’s a good idea to start to get your head around the things that will need to be addressed in your sale contract before you start shopping your business around to prospective buyers.
There are some obvious ones, like a list of what assets are included in the sale. If you are selling a business that includes lots of tangible assets like plant and equipment, motor vehicles, specific machinery and things like that it’s good to make a list, including serial numbers and/or any other identifying features so they can be listed in the contract.
If the main asset of your business is goodwill and things like digital assets, you should start to think about what the purchaser might want in order to make sure they can continue to run your business successfully. This can include things like all of the contact numbers that you have used in your business (including any mobile number that you might have used for both business and personal purposes). This could also include not only the main email addresses used by clients/customers to contact your business, but other email addresses that might be listed on directories or used by important people in your business to conduct their work.
Most people who buy a business want the business’ website and/or domain name.
This is very common in the Internet age. What is becoming more and more prevalent is the inclusion of social media handles/access for social media platforms like Facebook and Instagram if a business has a social media presence.
Sometimes business owners use things like mobile phone numbers, email addresses and things like social media accounts for both business and personal purposes.
You need to have a think about which of these “assets” you might be willing to let go, which ones you might want to keep (and if you want to keep any, whether or not this is likely to be a dealbreaker for the purchaser).
If the sale of your business is going to include a significant amount of stock or inventory, you need to make clear to any potential purchasers whether or not they are required to purchase your stock/inventory in addition to the purchase price for the business and if so, clearly define in your contract how the value of the stock/inventory is to be determined. For example, is a physical stock take going to be necessary, how long will it take, and accordingly what should your contract say about how and when the stock take is completed?
Sometimes a buyer and seller will get together to conduct a stocktake together in the days leading up to settlement. This enables the full purchase price including any sum of money for stock/inventory to be paid by the buyer to the seller on the settlement date.
An alternative approach is to include provisions in your contract for a stocktake to be conducted on the day of settlement and payment by the buyer to the seller for any stock/inventory to be made within a designated period of time after settlement.
Thinking about the logistics of how your business will actually be transferred to a buyer is just as important as thinking about things like price and the timing of your business sale.
If you’d like to speak to a solicitor for some advice about the process feel free to give us a call today and we will talk you through it over the phone or arrange a meeting to discuss matters in person.
Daniel McKinnon
Since graduating with two degrees in Law and Commerce from the University of Wollongong, Daniel’s spent over ten years solving a wide range of legal problems for the people of Western Sydney.