While it isn’t a legal necessity to have a business broker sell your business, the process can be very lengthy and complicated without one. Business brokers can provide you with their knowledge and expertise every step of the way. 

Business brokers can also help by providing contacts from a variety of different sectors which saves you time looking for solicitors, accountants and so on. 

Head over to our guide on using a Business Broker for more information on how they could help you.

When you’re selling a business, there are many complicated legal procedures that arise that you may be unfamiliar with. This is where the help of a solicitor can be invaluable. There are a number of different benefits to using a solicitor, including:

• Identifying the assets and liabilities to be sold
• Drafting warranties, indemnities and disclosure
• Exchanging ongoing supplier and customer contracts
• Resolving IT and IP issues, such as websites and trademarks

The impact that a legal professional can have goes much further than what is listed above and there are many processes that are affected by a legal issue in one way or another.

Yes, it is essential that you have an exit strategy before you sell your business. They help to plan for the probable and the improbable, providing you with a plan to exit your business with minimal fuss. It’s best to plan your exit strategy as soon as possible; allowing 3-5 years to start lining things up before actually putting the business up for sale is a good place to start. 

Not having an exit plan means you will find yourself making things up as you go along, and you leave yourself open to a variety of risks.

How long it takes to sell a company really varies from business to business. We have had sales complete within days and some that have taken years to complete. 

However, on average, we work to a timeframe of 6 – 12 months.

How do you know if the market is right for selling a business?

Market forecasting is a great way to know if the market is right for selling your business.Our business valuation calculator also factors in current market value, so you can use this (and input some of your own data) to help you understand what your business could be worth before deciding to sell.

There are two methods that are used when valuing a business for sale:

• Value your business with the Multiple Method – This is one of the most common methods used to value a business, and it works by determining market values for similar companies which can then be used as ratios to compare your own company to.
  

• Value your business using EV/EBITDA – Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) works with the business’s operating profit or net profit before any tax or interest charges are deducted.
  
  Depreciation and amortisation are accounting concepts that allow the writing off of tangible and intangible business assets on the balance sheet. These assets are then broken down to represent an annual cost of the particular asset based on its perceived operating life. 

You can use our EBITDA valuation calculator to start.

What tax do you pay when selling a business?

When you sell a business, it’s important to understand the tax you pay. This tax will comprise of:

• Capital Gains Tax 
• Business Asset Disposal Relief 
• Potentially, Corporation Tax

Who pays Capital Gains Tax when selling a business?

You will pay Capital Gains Tax if you’re a self employed sole trader or in a business partnership and you make a profit (gain) when you sell all or part of a business asset. 

Business assets you may need to pay tax on include:

• Land and buildings 
• Fixtures and fittings 
• Plant and machinery 
• Shares 
• Registered trademarks 

Who pays legal fees when selling a business?

Both the buyer and the seller are responsible for paying legal fees when selling a business, since they will both need to hire their own solicitors.

Where do you list a business for sale?

You can sell your business through our business selling services. We can help to list your business on the most appropriate sites and to the right people, focusing on your key buyer targets.

You can use our free valuation calculator to get an instant business valuation in just 3 simple steps; this will help you to get started with the process, or allow you to decide if the timing is right.

How do you find legitimate buyers for a business?

Using business brokers, such as ourselves at Hilton Smythe, is a great way to find legitimate buyers for your business when planning to sell. We can look for prospective buyers who will have the right funds to purchase your business, as well as deal with enquiries professionally, set sensible purchase prices and finish on sensible sale prices. 

Take a look at our guide on making your business more attractive to buyers for more tips on finding legitimate buyers. 

What questions should a seller ask a buyer when selling a business?

There are a few questions you should consider asking a buyer when you’re selling a business. Listed below are the first 4 questions we always recommend asking:

1. Why are you interested in buying the business?
2. What are your plans for the business?
3. How will you go about your due diligence process?
4. How will you finance the purchase?

What documents do you need to show a buyer of a business?

When you’re collecting information, you should try your best to organise information into categories, including everything the buyer will want to see. These document categories include:

• Corporate structure and records
• Share capital and shareholders
• Accounts
• Finance and banking
• Contracts and trading 
• Assets 
• Intellectual property
• Insurance 
• Consents and compliance 
• Employment
• Real estate 
• Health and safety 
• Tax

The above is the bare minimum of what is expected in a due diligence process and some categories may change as the transaction progresses. 

What happens once a business is sold?

If you continue to be involved with the business, you will retain any responsibilities and liabilities that are associated with the role.You will also have other tasks to complete, even if you choose to have no further involvement with the business. This could include informing staff and customers about the sale, informing HMRC and Companies House that you have sold the business and completing tax and VAT returns.