Further to my articles about selling your business – from the initial business valuation, getting ready to exit, preparing for sale, and marketing your business, we now look at the final stage of the process, Completion.

The aim for every transaction is to move through to completion with the minimum of fuss.  The detailed preparations for sale that I referred to in my previous article should help achieve this.  The closing stages of a transaction, i.e. working through Due Diligence and dealing with completion issues such as agreeing legal documentation, require all parties to work in a collaborative manner in the knowledge that both teams are working to achieve the same end result.

I have had a preliminary offer for the business, how do I seal the deal?

Is the offer acceptable and does it meet you requirements?

The chances are a preliminary offer does not represent the best and final position of a buyer so there is usually room to negotiate.  This could mean negotiating headline price, payment terms (i.e. moving deferred payments to completion), commercial terms and usually a combination of all of these.

The trick is to find an experienced adviser on which you will be able to rely to negotiate the best terms for your deal, whilst understanding what is most important to you.  These negotiations may take a little time but getting these details nailed down now can help keep up the pace later in the deal.

Due Diligence

Once the broad terms of your deal have been negotiated, the buyer will want to ensure they will not get any unwelcome surprises post-completion.  This is the purpose of Due Diligence.  Assuming you have adopted the approach set out in our previous article, you can move into this process feeling well prepared and confident that any price-chipping will be minimised or eliminated.

Legal documentation

Often at the same time as Due Diligence is being completed, the lawyers will draft up a Share Purchase Agreement or Asset Purchase Agreement (the distinction is based on whether you are selling shares in a company or just assets within it or a sole trade/partnership).

As the buyer’s lawyer ordinarily prepares the first draft legal documentation, you will need close engagement with both your accountant and lawyer at this stage to run through the documents and to understand which areas you can accept and which areas you wish to negotiate further on.

As you move further towards a completion date, an important part of this process is preparing a disclosure letter.  There will be warranties in your Share Purchase Agreement – these are a series of statements that represent legal promises to your buyer.  If, on reading these statements, you need to declare that you cannot promise some of the statements to be true, or further clarification in an area is required, the disclosure letter is your opportunity to do this.  As the warranties will cover legal, financial and commercial aspects of the business you will need to work closely with your lawyer and accountant to make sure your disclosure letter is complete.  Your lawyer will be of critical importance in pulling this document together.

Champagne all around

Once the Due Diligence is complete and the legal documentation agreed, you can formally complete the deal and start to think about life after exit, after all the years of high and lows associated with business ownership.

Now I have completed, is everything done and dusted?

Depending on how your deal was structured there may be a few things to tie up after the hangover has passed! These can include:

  • Completion Accounts – These are required for transactions where a best estimate has been made of cash and debt in the business at completion and can give rise to both shortfalls and uplifts in consideration and will result in either a payment to the buyer or the seller which is agreed by both parties.
  • Anniversary Accounts – These are required for transaction structures which involve an earnout element.

If you are considering selling your business in the next few years, get in contact with Ollie Newbold for a free consultation, call 01242 776000 or email