Selling your business Q&A

1. In preparing for a trade sale, what aspects of 'legal housekeeping' are the most important?

There are three key aspects of 'legal housekeeping' when preparing for a trade sale:

• Good maintenance of share register (it's the 'title deed' for ownership of the company);
• Good paper trails, particularly for land and buildings, IP and leased assets; and
• Good contracts – documented and balanced.

2. In your experience, how far in advance of a proposed trade sale would this 'housekeeping' process commence?

Much of it is ongoing work and would benefit the business in the ordinary course in any event. Time passes quickly when it comes to filling in gaps, so a 'health check' is something which sellers should consider once there is a possibility of a sale.

3. What other issues should be considered in advance of a proposed trade sale?

The seller needs to ask himself a few questions, the most basic being: is the business ready for sale? Commonly, as well as owning the business, the target company owns non-trade assets, such as property. In my experience, to realise best value, the seller should separate the trade and non-trade assets because a trade-buyer will often be reluctant to pay full price for non-trade assets. Similarly, to avoid unnecessary transaction taxes, you need to plan well ahead of the sale.

4. In a trade sale, why is the counsel of a solicitor to the vendor so important?

The buyer will most likely have been through the process before and will be experienced in handling sellers and their expectations. Sellers generally won't have matching experience and need backup.

5. How can good legal counsel help maximise the vendor's return in a trade sale?

The sellers' lawyers are there to make sure that the headline price that's put on the table the first day by the buyer can be collected by the sellers at completion (and not reclaimed from them post-closing via any completion accounts price adjustment or warranty claims). Careful review of 'small print' is required to make sure that the legal agreement 'does what it says on the tin'."

David Naughton is a solicitor in the corporate and commercial department of RDJ Glynn and is contactable on 091 594777 or at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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