Selling Your Business? A Legal MOT

After being with Allington Hughes for over 40 years, from his training in 1971, through qualifying as a solicitor in 1975 and becoming a Partner in 1978, David Parry has seen it all when it comes to business.

David has taken the time to produce a Legal MOT detailing some of the common pitfalls when selling a business, and we dearly hope they are of use.:

"I deal with a lot of business sales during the course of the year and it’s well worth looking at some basic matters well before anything of this nature comes along as it can be very stressful to have to deal with basic legal and accountancy matters when so much else is happening at the same time.

1. The most important tip is “check your lease” - if your business operates from these premises only and the lease has only a short time to run, or has actually expired, the business is effectively unsaleable until this has been sorted out and you could then be looking vulnerable to a landlord who becomes aware of your intention to sell. I have had to renegotiate leases several times this year and, at the best, there is a significant delay in dealing with the sale transaction, and it clearly could be a lot worse.

2. "See your accountant” - don’t just deal with him/her at arm’s length each year about the accounts, arrange a meeting to discuss all aspects of your business, coupled with the suggestion that you might be considering a sale: there have been fundamental changes to the capital allowances rules which came into effect in April 2012 and, whilst these primarily relate to purchasers, you should be sure to get the best possible guidance from your accountant on all aspects of your business.

3. Still on the tax aspects, take a deep breath and “visit the HMRC website”: every time I go on to this, I am astonished at the quality of the information they give you – suggestions, model calculations and authoritative guidance. A lot of people think it will be impossible to understand, but the reverse is the case, and it could be really helpful, as well as profitable for your business, to get familiar with this massive site. It might also make your meeting with the accountant really beneficial to the bottom line of your accounts!

4. “Contact your lawyer at an early stage” - a brief initial chat will help enormously, so that preparatory work can be put in place, and it won’t trigger an enormous bill. I get a lot of matters where people think there is a saving to be made by leaving the legal work until the very last minute – I promise you this is not the best thing to do as it is always more expensive to have to drop everything else to service something which might have been dealt with in a more realistic time frame. It is also really worrying and stressful from the lawyer’s point of view – nobody likes having to rush things.

5. “Don’t go on holiday!” - I’ve actually had several transactions where the client gave me

instructions on a complex matter which would inevitably involve a lot of contact with them about the sale and then, at the end, mentioned that he was just leaving on holiday the next day – definitely not a good idea! Go away when it’s all over.

I hope these are of some practical help – best of luck with your business in the meantime!"

If you would like any further information on Business related matters, or anything else, then please feel free to get in touch with us on 09178 291000 for Wrexham, 01244 312166 for Chester or 01492 641222 for Llanrwst.

David Parry has been a partner at Allington Hughes since 1978.