So, you’ve decided to sell your company. Congratulations! Selling a business is a significant milestone in both your career and company history. But before you get ready to sign any contracts, there are several steps you’ll need to take—such as getting your statutory books in order to ensure the process is as painless as possible.
Selling a business can be a difficult decision and it can also be a challenge from a legal point of view. In this article, we’ll take you through the most commonly asked questions to ensure that you get a fair price for your business and avoid any unnecessary complications.
Get your statutory books in order before you sell
Your company might mean everything to you, but you can’t expect potential buyers to feel the same way. The truth is that people who don’t know your business as well as you do will be tasked with deciding its value. They’ll take your profits, assets, and margins into account when making that decision.
If your statutory books and records aren’t clear enough, you could end up in trouble. That may take the shape of tiresome legal issues, unpleasant fines, or even having the company you’ve worked so hard to build being under-valued. Either way, you risk leaving money on the table or having your reputation damaged.
Facts and charts can help you demonstrate a point. So be ready to show, not tell, how great your company is and why you deserve to be paid the asking fee. The best way to support your case is by being transparent and starting any business conversation with impeccable books.
What buyers will be looking for
So, where do you start with your company books when selling your business? Here are a few things you should keep in mind:
- Potential buyers want to ensure that all the officers, past and present, have been appropriately appointed.
- Company records must be clear about the share capital, incorporation, and the movement of all shares.
- You must have in-depth records of all the key decisions you’ve made over the past years.
Essentially, you’ll need to have a pile of documents ready to share with potential buyers and their legal representatives. Your bookkeepers, lawyers, and accountants will have to prove how much your company is worth. Your statutory registers should be kept up to date to comply with the law and also to display the company’s progress.
The documents required for selling a business include your statutory registers, financial statements, Accounts Payable reports, inventory lists, and asset depreciation schedules. Among other things, you’ll have to present your business plan, marketing strategy, all licenses and certifications that you have, and a list of your current clients. This should include the value of their contracts and profit projections for the coming years.
You must make sure that your statutory books and registers are transparent when it comes to directors, share ownership, costs, tax obligations, and margins. Information on insurance, suppliers, staff, cash payments or loan agreements should also be made available.
Anything and everything that can help evaluate your business correctly should be in order before you start any conversations about your company’s value, to ensure you get the best possible deal.
Bookkeeping errors can damage a company’s value regardless of its size. French IT company Atos, for example, lost almost £1 billion of its market value due to accounting errors. Make sure you don’t do the same.
Don’t forget the small changes
Selling a business is no small task so it’s easy to oversee things and ignore important details that can make a difference to your bottom line. If you know of any changes in your company’s books, make sure that everything is documented—including the reasons that lead to those differences.
It’s in your best interest that all company records at Companies House are up to date and that everything written in your official documents is aligned with the Statutory Registers.
Another issue that commonly causes delays when selling a business is share ownership. So, ensure that all the documentation is readily available, including the share certificates that need to be cancelled.
Only after all your company books are in order will you be ready to close the deal and celebrate your success.
Selling a business is rarely a breeze due to the amount of paperwork involved before the transaction and even after you sign the contract. But if you want to ensure that the process runs as smoothly as possible, get your books and registers in order first.
Make sure your accountants and secretarial providers include all the required documents and that the numbers in your records are correct. Encourage them to go through all the documents regarding the significant events in your company’s history and check for any missing records that could impact your company’s value. Last but not least, make sure no one forgets about share certificates or any modifications in official documents.
If you’d like to enquire more about preparing your business for sale, request a callback, and we’ll get in touch to help you get your statutory books in order