Preparing for the Sale of Your Business

Sales of businesses become more complicated and therefore expensive when the seller has not thought ahead. Preparation is the key to success.
If you are contemplating the sale of your business, these are the things you should get together; your solicitor will need to see them at the earliest opportunity:

If you are Selling a Company,

the Memorandum and Articles of Association
the Certificate of Incorporation
any certificate of change of name
copies of any Special Resolutions altering the Memorandum & Articles
statutory books of the Company together with the Company Seal if any
full names and addresses of the shareholders together with share certificates
a copy of the last annual return of the company and, in due course, details of any changes since the date of that return

If you are Selling a Business Which is not a Limited Company

The full trading name and address of your business
Your full name and address
(if applicable) Your partners’ full names and addresses

Details of how the sale price is to be apportioned between the:

freehold or leasehold premises	£........................................
goodwill	£
trade fixtures and fittings of the business	£

any special terms as to the valuation of stock (usually carried out immediately after completion of the sale)

In the case of any business sale

Details of your accountant
Your VAT registration number
A list of fixtures and fittings and any other trade, plant and equipment to be sold with the business

Please list on separate piece of paper
Copies of all maintenance agreements for equipment, including computers
Copies of any hire purchase, leasing or other arrangements applicable to any of the business assets, stating whether you expect the buyer to take over these agreements on completion,
Copies of computer software licences
Copies of details of any intellectual property rights, e.g. trademarks, patents, copyright, registered designs
Full details of your employees¹ , as follows:
- the identity and age of each of your employees who will transfer to the Buyer
- the date when each employee’s employment began
- the date on which each employee’s period of continuous employment began
- the scale or rate of pay or method of calculating pay
  how each employee is paid (whether weekly, monthly or otherwise)
- hours of work of each employee
- holiday entitlements
- any terms as to sickness or injury, including any provision for sick pay
- pensions and pension schemes
- notice periods both by you and the employee
- the title of each employee’s job or a brief job description
- details of any fixed term contracts
- the place of work
- any applicable employee contracts/statements of terms of employment, and employment policies and procedures
- full details of any grievances raised, or disciplinary proceedings taken, whether informally or formally, within the last two years
- information about any claim brought by an employee against the business in the past two years or which you have reasonable grounds to believe may be brought; and
- information on any collective agreement² which will have effect after the transfer
Copies of all pension policies and full details of contributions made by you and your employees.
Copies of environmental licences, particularly relating to the disposal or discharge of waste.
Copies of correspondence and other documents arising from any visits or inspections by the fire authority, the local environmental health department, or a local authority health and safety officer.
Copies of your fire certificate and your maintenance records relating to fire fighting equipment.
Records of health and safety audits, including any asbestos audit carried out³ .
Copies of any licences affecting the property, such as liquor and performing rights licences.
Copies of all long-term contracts with customers and suppliers and agency and distribution agreements.
Your last three years’ trading and profit and loss Accounts and an up to date balance sheet.
Copies of deeds of premises occupied by your business, whether freehold or leasehold.
If your property is mortgaged, the name and address of the lender and your account number so that we can obtain the deeds on loan.
Full details of advance payments made by you for the benefit of the business, of which you may wish to recoup a proportion from the buyer.
Full details of advance payments received by you from customers, a proportion of which your buyer may properly be entitled to.
Full details of any litigation, whether current or pending.

¹
These details are required under regulation 11 of the Transfer of Undertakings (Protection of Employment) Regulations 2006, which came into
force in April 2006. The information must be given not less than 14 days before the transfer of your business or as soon as reasonably practicable. If this information is not supplied or the information is defective, an employment tribunal can award to the buyer such amount as it considers just and equitable.

^{2

A collective agreement is one made between an employer (or employers' association) and a trade union governing the relationship between the parties. It will only be legally binding upon the parties if in writing and if it states it has legal status. Some of the terms and conditions of individual employment of those employees may be covered by a collective agreement.}

^{3

Since the 21st May 2004, every person with a legal responsibility to maintain or repair commercial buildings has a duty to manage asbestos under the Control of Asbestos at Work Regulations 2002.

The duty is to:

• Find out if the building contains asbestos, its quantity and condition

• Presume materials contain asbestos unless there is strong evidence to the contrary

• Make and update a record of the location and condition of the asbestos

• Assess the risk from the asbestos

• Prepare a plan which sets out how the risk is going to be managed, including monitoring and removal

• Carry out the management plan

• Review the management plan periodically

• Provide information to anyone working on or who may distribute the asbestos

It may be that you have not carried out any survey to assess the presence or otherwise of asbestos. If it is pretty obvious that you do have asbestos or alternatively that you do not, then you would not need to have an asbestos audit. Otherwise, the buyers may insist that you produce evidence of your business having carried out its duties under the regulations. One easy way of dealing with the matter would be to appoint asbestos survey consultants. We can put you in touch with the right people if this becomes necessary.}

© Harold Michelmore & Co 2007

Please note that the information and advice in this Note is provided for general guidance only. We believe it is accurate and up to date, but you must seek personal advice on any specific case or matter. We cannot accept liability for your reliance only on information or advice in this note.