Where to start? Who to trust? How to proceed? The sale of a business is often a pivotal stage in the life of an entrepreneur.
Getting the right people from the start is the most important consideration to ensure the success of the project.
The notary is a leading professional to act as a leader in the file. Here are some tips on the art of selling a business.
❚ THE LEGAL
The sale of a business requires the drafting of several legal documents, including a letter of intent, possibly an offer to purchase or a promise to sell, and a sales contract. This is why the seller must surround himself with a lawyer who specialized in corporate law.
The recipe for a good legal adviser, a notary, for example, is to know how to popularize and simplify the process for the entrepreneur who sells his business with the help of a M&A advisor. The role of the notary becomes that of a true quarterback: he assumes leadership, masters, and validates the information, coordinates the professionals involved, and deals with the buyer’s representatives.
Its objective is to facilitate negotiation between the parties with the aim of concluding the transaction without risking losing the seller. The exercise can be quite complex, especially when the entrepreneur’s emotions come into play.
❚ THE NUMBERS
Their role is to determine the value of the company. The Seller’s accountant will provide, in a timely manner, the financial statements and other performance results requested.
The buyer’s accountant will provide a second opinion. Occasionally, a broker specializing in business sales, whose role is to find potential buyers, intervenes in the file.
The more the entrepreneur is difficult to replace within a company, the lower the selling price offered is high for potential buyers. Mr. Robert Williamson.
❚ DIAGNOSIS
A few good meetings with the notary will enable the seller to understand the stages of the sales process and the role of each stakeholder. A good quarterback may even recommend, if necessary, postponing the sale to a more favorable time.
THE LEGAL STEPS
❚ The buyer’s or seller’s letter of intent > This is the starting point for negotiations and the prerequisite for disclosing
information about the business. It represents a guarantee of seriousness and confidentiality. However, even with a letter of intent, no customer and employee information should be provided.
❚ The conditional purchase offer > It binds the buyer, but on several conditions: financing, performance, profitability, etc. This is the due diligence period.
❚ The sales contract > This is the culmination of the process. The contract includes, among other things, the guarantees on both sides, the annexed documents, such as employment contracts, franchise contracts, leases, financial statements, etc.
❚ CONTROL OF INFORMATION
We must be prepared for verification requests from potential buyers while ensuring the control and confidentiality of information. The information must be given in dribs and drabs, from the least confidential to the most confidential. Among the important information that must be provided, after the purchase offer and on the recommendation of the notary, we will find:
1. A numbers-driven business portrait or profile
2. Financial statements for the last 3 or 5 years
3. Lists of assets, fixed assets, equipment, and customers
4. Business model of the company (strategies, know-how, and policies by consulting M&A advisory)
5. Meetings with staff and customers
“The greater the company’s ability to generate sales and profits, the greater its value. From this stem most of the accounting indices that justify the selling price. Mr. Robert Williamson.
❚ THE SALE PRICE BALANCE
For several reasons, a sale price balance is often agreed upon between the seller and the buyer. Here are the main reasons:
Their role is to determine the value of the company. The Seller’s accountant will provide, in a timely manner, the financial statements and other performance results requested.
The buyer’s accountant will provide a second opinion. Occasionally, a broker specializing in business sales, whose role is to find potential buyers, intervenes in the file.
The more the entrepreneur is difficult to replace within a company, the lower the selling price offered is high for potential buyers. Mr. Robert Williamson.
1. When financing is not 100% available or to spread out payments
2. To cover potential risks of lawsuits or unpaid taxes
3. To keep the seller involved in a way that is favorable to the success of the business
4. To guarantee the representations and information provided during the process
