Is your business ready to sell? If someone made you an offer tomorrow, the test would be whether the deal got through the buyer’s due diligence without the price moving, and most owners are more confident about that than their paperwork justifies.
The exit readiness review is me going through the business as a buyer’s solicitor would, before a buyer is involved, and telling you what they’d find. It’s the starting point for exit planning, and it’s useful whether you’re planning to sell in two years or just want to know where you stand.
What I look at
The review follows the same ground a buyer’s legal due diligence covers, because that’s the test the business will eventually have to pass.
I start with the company itself: the articles, the share capital, the register of members and the filing history, looking for anything that would stop you showing clean title to the shares. Then the ownership arrangements, which means whether there’s a shareholders’ agreement, whether it still reflects who owns what, and whether it would make every shareholder sell on the same terms if a buyer wanted the whole company.
After that come the commercial contracts. I look at your main customer and supplier terms, how easily they can be ended, and whether any of them can be terminated or renegotiated on a change of control, which is the clause that most often surprises people. For the staff, I check whether key people have written contracts, whether those contracts contain restrictive covenants that are likely to be enforceable, and whether anyone is treated as self-employed who might not be.
Intellectual property gets its own look: who created what, whether it has been assigned to the company, and whether the trade marks the business relies on are registered to the right entity. Premises are next, including whether the lease is in the company’s name or yours, when it ends and what it says about assignment. I finish with the regulatory side (where the business needs a licence or authorisation to trade), data protection, and anything in the way of disputes, claims or unusual liabilities that a buyer would want disclosed.
What you get
A written report, graded area by area. Red means a buyer will use it against you, so fix it before going to market. Amber means it will probably affect the price, the warranties or the timetable. Green means there’s nothing to do. Each item comes with what I’d recommend, roughly how long it takes, and a fixed fee for me to deal with it.
We then go through the report together and agree what to tackle first. Some clients have me do the follow-up work; some give the report to their own solicitor, and it’s written so they can; and some decide a particular issue isn’t worth fixing, which is sometimes the right answer.
What it doesn’t cover
The review is legal. It isn’t a valuation, a review of your accounts or tax advice. Buyers will look closely at the numbers too, and where that work is needed I introduce clients to corporate finance advisers I trust, who quote for it directly. Your own accountant should be involved in anything with a tax angle, particularly any change to the share structure. My article on how much your business is worth covers where the legal and financial sides meet.
How long it takes
Usually four to six weeks from instruction to report. Most of that depends on how quickly the documents arrive. I’ll send you a list at the start, much like the due diligence questionnaire a buyer would send, and you upload what you have. Finding out what you don’t have is part of the point.
How much it costs
A fixed fee, from £3,500 plus VAT, depending on the size of the business and how many companies are involved. I’ll confirm it in writing before starting.
If you’d like a free first look before committing to that, the exit readiness scorecard asks a series of questions and gives you a short report on where you stand. It won’t read your contracts, but it will tell you whether it’s worth having someone do so.
When you’re ready, get in touch with a bit about the business and when you’re thinking of selling, and I’ll come back to you with a fixed fee.
