Advice on Selling a Business - the Legal & Due Diligence Stages

Once the Heads of Terms have been signed by both sides the deal moves into legal stages. During this period which can be as short as 5 weeks but which often, unfortunately, extends to 3 months there are usually 3 activities going on:

• Solicitors prepare and agree in final form the legal documents which will create a binding contract between buyer and seller.
• Buyers carry out due diligence enquiries which usually fall into 3 categories: legal, accounting and commercial.
• Buyer and seller normally increasingly work together such that once the sale is completed there can be a smooth transfer of ownership.

We are always needed to keep the process moving forward as quickly as possible. At this stage, time is the seller’s biggest enemy because whilst the deal never improves if the legal stages take longer than expected, it can become substantially worse simply as a result of ‘events’.

We have seen deals fail for reasons such as: the collapse of Northern Rock; the loss of the buyer’s major customer; ill health.   

Quote from history: ‘The minute you read something you can’t understand, you can be sure it was drawn up by a lawyer.’ Will Rogers (1879 – 1935)

In summary, when selling a business, the legal satges can take anything from 5 weeks to 3 months.  Better business brokers, like Anderson Shaw, stay engaged in the process to ensure that the time is as short as possible because delays never favour the seller.