Step 1: know what it is you are selling!
If your business is not operated through a company or it is but, after taking advice, you decide to sell the assets rather than the shares, it becomes known as an asset sale or sale of a business.
If the business is operated through a company, and you decide to sell the company shares, it is referred to as a share sale or purchase or company sale/purchase.
An asset sale could include stock, work in progress, goodwill, equipment, a business premises lease, fixtures and fittings, tools of the trade, order book, intellectual property and so on. You and your buyer may also agree that the buyer takes some or all the business liabilities – in fact, some liabilities must be passed over such as employee rights (although the purchaser might try and take only certain employees: a subject for another of our blogs!).
If the business is operated through a company, a purchaser may prefer an asset purchase to a share purchase as it lessens the potential for hidden liabilities. This is because when a purchaser buys a company it comes as a complete bundle – all the assets and all the liabilities are held within the company. In contrast, an asset sale allows the purchaser to cherry pick assets to buy: the same point could work for you in that you could cherry pick the assets you want to sell.
Step 2 of the guide will look at preparing for sale of a business.
Lathams Commercial Legal Services. Call or click for an initial free (no obligation) consultation on the basics of selling a business.