For business owners thinking about selling in 2027, it’s worth checking the paperwork before looking for a buyer. Donal Bannon, partner and commercial law solicitor at Morecrofts, explains where to start, whether the sale is part of retirement plans or a move to something new after years of building the business.
For business owners thinking about selling in 2027, it’s worth checking the paperwork before looking for a buyer. Donal Bannon, partner and commercial law solicitor at Morecrofts, explains where to start, whether the sale is part of retirement plans or a move to something new after years of building the business.
Contracts, company records and arrangements with shareholders will all come under scrutiny during due diligence, when the buyer and their advisers examine the business in detail. Missing documents or unresolved issues can take time to sort out, and they are harder to deal with when a buyer is waiting for answers.
Get your records and contracts in order
A buyer will want to understand who owns the business and how it has been run. For a company, that means checking share ownership, company filings, board minutes and shareholder arrangements, as well as the records of any changes made over the years.
It’s worth checking that those records are complete and reflect the current position. Something that seems like a small administrative gap can take longer than expected to put right once a transaction is underway.
Check your customer contracts too. Many businesses have long-standing relationships that work well day to day but have never been properly documented. If one customer accounts for a substantial share of your turnover, a buyer will want to see a signed agreement and understand how secure that income is.
They will also look at how long the agreement lasts, how easily it can be ended and whether the relationship can continue after the sale. The same questions apply to key suppliers and other important business partners.
Consider how the business would work without you
In an owner-managed business, it’s common for the owner to be the main point of contact for customers, make important decisions and deal with problems as they arise. That may have worked well for years, but a buyer will want to know what happens when you leave.
Ask yourself who would run the business if you were away for six months. Could the management team make the necessary decisions? Have responsibilities been shared out, and are the systems and processes written down so that others can follow them?
If too much still depends on you, that is something to work on before a sale. Giving others time to take on responsibilities can help a buyer see how the business will continue after you leave.
Look at outstanding issues before the sale starts
An expired contract, an employment dispute or a problem with business premises does not necessarily mean a sale cannot go ahead. You will still need to establish what the problem means for the sale and what can be done about it. The same applies to missing documents, regulatory concerns and weaknesses in data protection arrangements.
If an issue comes to light halfway through the transaction, the buyer may ask to reduce the price or ask for additional protection. That could mean greater obligations for you under warranties or indemnities, or an agreement that some of the purchase price will be paid later.
There may also be delays and extra professional costs while the problem is investigated. Reviewing these matters before you agree heads of terms gives you more time to understand your options, rather than trying to resolve them under pressure.
Allow time to plan the sale
Some preparation takes longer than gathering documents. Improving profitability, developing the management team and resolving legal issues are not usually things you can finish in a few weeks. Starting earlier gives you room to work on them alongside running the business.
You will also need time to consider how the transaction should be structured and take advice on any tax planning opportunities. Whether you are considering a management buyout or a sale to a third party, those discussions are worth having before the details of a deal are settled.
If you’re considering selling in 2027, our corporate team can help you check the paperwork and work through any legal issues before you approach buyers.
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