If you’re looking to sell your business, you may be wondering what steps are involved, and whether or not you need to seek legal help to guide you through the process.
Whilst it is not a legal requirement to hire a lawyer to assist with the selling of a business, it is highly encouraged to ensure a compliant transaction that runs smoothly from start to finish.
Find out more about why hiring a lawyer can be a beneficial decision when selling a business in the UK...
Why do you need a solicitor when selling a business?
There are many reasons why you may need a solicitor when selling a business.
For example, a solicitor can help to draft the required documents that allow the business owner to be able to sell the business legally.
As well as this, it’s important to identify exactly what it is that you’re selling – something that we come across often here at Smith Partnership is that the parties believe they have done a deal, however, upon questioning, it becomes apparent that they’re not entirely sure what the deal is.
Having a solicitor on board to ask important questions can help to clarify what the deal is.
From here, a solicitor will then document this information accurately, meaning both parties will have some recourse if things don’t pan out as planned.
For example, if people have a different understanding of the deal that is done, it may cause some conflict afterwards, and so these documents are in place to try and resolve any difficulties that may arise afterwards.
What are the specific ways a business lawyer can help?
As mentioned above, there are certain documents that can be drafted up by a business lawyer.
Acting for the buyer, Smith Partnership can make sure you have protection so if the deal turns out to be not what was originally agreed, there is some recourse to getting money back.
The main aspect from a seller's perspective is that you need to protect yourself from any claims that come out after the transaction.
This can be done with the following activities:
- Heads of terms – these documents are in place to set out the main terms of a commercial agreement that has been reached between two parties – in this case, the seller and the buyer. Solicitors can get involved with drafting these documents.
- Due diligence exercises – solicitors can get involved with drafting questionnaires and creating documents.
- Asset purchase agreement/share purchase agreement – this is the main contract that details the specifics, such as assets that will be purchased, the price, and breach of contract provisions.
- Ancillary documents – this includes any supporting information to the main document, such as papers, forms, board minutes and resolutions, as well as other information that can verify the main document. As part of these ancillary documents, it may be required that you must do certain things in certain ways – if you don’t, the transaction might be void and not legally binding.
By having a business lawyer involved in the process, you can ensure you are compliant with the law.
Due diligence checklist for selling a business
Due diligence activities are often broken down into three elements:
This usually also includes a questionnaire that is tailored to the transaction and the business to find out as much as you can about the business.
The buyer can come back and enquire more, if needed.
How will a solicitor help my business when I sell it?
Hopefully, there will be no further requirement for legal advice once the business has been sold.
However, there are a few small tasks that a solicitor can help with once the transaction has been completed. For example, a solicitor can take care of filings for Companies House or ensure any property elements are registered at the HM Land Registry.
Should any issues arise after the sale of the business, then a solicitor can provide a clear record of what was shared in the initial stages and what was agreed upon, identifying any information that may have been misconstrued and therefore advising on the best next steps.
Can you sell a business without a solicitor?
If the steps involved with selling a business in the UK are not carried out properly, things can get lost, therefore complicating and lengthening the process.
Luckily, solicitors are on hand to clearly document the process, therefore protecting both parties and ensuing everything runs smoothly and compliantly.
There are some risks involved to selling a business without a solicitor. For example, as a seller, you could find that you are not getting paid what you wanted, or as a buyer, you could end up with various liabilities that you didn’t anticipate.
So yes, whilst you can technically sell a business without a solicitor, it isn’t advised, and instead we encourage you to seek business sale legal advice to help mitigate any risks.
Get legal advice for selling a business in the UK today
Smith Partnership’s team of corporate and commercial lawyers are on hand to support businesses with the selling process.