You’ve been the operator of your business for 20 years now and it’s time to retire. Or you’re ready for a career change and you want to sell your company to kick-start something else.
Whatever your reasons, selling a business is no easy task. There are a countless number of moving parts over which you need to maintain complete control, not to mention the fact that a clear plan must be in place to ensure that your successor is properly equipped to fill your shoes.
Managing Relationships with Staff Members
The last thing you want in the midst of a business sale is upheaval among your staff members, suppliers, vendors, key stakeholders or community relations. It is critical that you consider the wants and needs of everyone involved and start buckling down on the nitty gritty details such as determining who will stay and who will go, who is in favour of selling and who isn’t, will outside relationships be maintained or will the new owner source his or her own contacts?
Contracts for Employees or New Hires
You want to give the new business owner as much confidence and security as possible. Part of that might include drafting agreements for present and/or new employees. By binding staff members through legal agreements, your new business owner will know with full confidence that those who have signed are serious about the company and plan on staying.
Renewing Your Lease
A secure company is one whose lease isn’t about to expire. Make sure your lease agreement is up to date and even more so, seek a fair assignment provision. Although often overlooked or missed, a fair assignment provision can make the transition process much smoother in a couple of ways:
- It gives you the right to pass your lease to the new owner without going through a lengthy approval process with your landlord (provided the new owner is credit worthy)
- It avoids the possibility of your landlord demanding that the new owner sign a separate lease, which creates ample opportunity for rate hikes and unfavourable provisions, resulting in negative repercussions on the deal
Avoid Entering into Long Term Agreements Unnecessarily
If you know a business sale looms in the near future, make wise decisions when it comes to company contracts. For example, renew your credit card POS terminal contract for one year instead of five, stay on a month-to-month phone plan and don’t make long-term binding agreements with suppliers. You want to give the new business owner the security of knowing these systems are in place, but also the flexibility to make his or her own decisions.
Stay in the Know
Do you have your finger on the pulse of your business? Do you know your weaknesses and strengths?
The more you know, the better able you’ll be to manage the sale of your company. Interested buyers won’t be thrilled by surprises that pop up along the way or undisclosed information that suddenly makes its way to the surface. Be open, be honest and be knowledgeable about your business.
A good legal advisor can guide you through the intricacies of selling your company. With the right people on your team, you’ll experience fewer complications, a fair agreement, a faster sale and a more seamless transition from one owner to another.