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Selling your business Make sure your client, employee and supplier contracts, and
potentially a Vendor Due Diligence report. All
buyer is fully
The process of selling your funded to do the of this confidential information will be placed
business can be an emotional deal; don’t wait into a secure third party on-line Data Room.
to the end of the
rollercoaster, but you can process to find out. This allows potential buyers access but it also
allows you to monitor who has gone in and
take out some of the stress by see what they’ve looked at.
understanding it and preparing
for the best outcome DUE DILIGENCE
The buyer’s advisors will undertake due
diligence on your business, scrutinizing
Selling a business has been described by everything to identify where the value is, any
some members as death by a thousand risks to mitigate, and anything that could
cuts. Buyers and their advisers can chip justify a lower purchase price.
away as they discover things that hadn’t
been disclosed or explained initially. If Members who have gone through the sale
you hide data or hold anything back process agree that you should get the best
it will make the buyer nervous; when adviser you can afford to avoid warranty
they find out later it could justify further issues and give your buyer peace of mind.
chipping or withdrawal from the deal. The Non-disclosure agreements should reassure
process often takes longer than planned, you to be as open as possible and disclose
depending on factors both within and any outstanding issues. For example, be
outside your control. open about large upcoming costs and deal
with any claims. Ensure your employment
VENDOR DUE DILIGENCE contracts are up to date. Try to extend your
Some members have undertaken their supplier and customer contracts. Look at IP
own informal due diligence in advance rights on any tech you are selling, and review
to identify any issues for a potential lease terms on property and equipment.
purchaser. Others have opted to pay a
third party for Vendor Due Diligence, It’s hard to avoid price chipping. The best
usually for sales to bigger buyers. This way to deal with it is to make sure you have
report can offer a fuller picture of the thoroughly prepared for due diligence and
business and present any issues in a that your Data Room is in good shape.
balanced way in context of the trading Acquirers will look for a fast turnaround on
history. It gives potential buyers the relevant documentation, so the quicker you
information and analysis they need to help can get this to them the more professional
make an informed decision about their you will look.
level of interest prior to their own due
diligence process. WARRANTIES
Partners advise Warranties are designed to bring any areas
INFORMATION MEMORANDUM (IM) against overly of concern to the buyer, and imposes legal
The IM helps potential buyers to decide hyped or liabilities on the seller. Warranties typically
if your business is a suitable acquisition glossy IMs and cover areas including the company’s financial
recommend
target. It’s an executive summary of the running your accounts, liabilities, litigation, property
reasons to buy your business. Acquirers business to the dealings, tax, insurance, employees, IP,
will be looking for market access, national exact same filing and compliance amongst others. While full
or international growth, IP rights, potential system as the disclosure should reduce risk, there may be
cost savings, cross selling opportunities, layout in the Data issues outside your control or knowledge, so
strength of management team, brand Room so you can members recommend indemnity insurance.
value, and distribution channels amongst copy and paste
other financial elements such as recurring when relevant
sales and long-term client contracts. documents are The number one reason a deal
requested (IM
& Data Room falls over during the process is
DATA ROOM templates from because the company’s financial
A key part of the sale process is the Cavendish performance falls short of the
Data Room. It ensures that final Corporate
offers are made on the basis of full Finance are agreed numbers included in the
available to
disclosure. Buyers will ask for lots of members in The Information Memorandum.
detailed financial, commercial, and legal Supper Club
information about your business including Insights Hub) Caroline Belcher, Partner & Head of Exit
management accounts, copies of all Practice, Cavendish Corporate Finance