If you’ve decided to sell your business, it’s highly likely that you’re incredibly excited about the prospect. You’ll already be daydreaming about what you’ll do with your newfound freedom, but first, you need to get the sale process done and dealt with.

Selling a business is a relatively complicated process, one that usually requires the assistance of a broker. As a result, the legal process tends to take a significant amount of time. In the UK, the legal process of selling a business typically involves several stages, including due diligence, the negotiation of terms, and the drafting and signing of legal documents.

Due diligence

One of the most important stages in the legal process of selling a business is due diligence. This involves the buyer conducting a thorough investigation of the business to assess its financial, legal, and operational status. Due diligence can take several weeks or even months to complete, depending on the size and complexity of the business. 

During this stage, the buyer may request a wide range of information from the seller, such as financial statements, tax returns, contracts, and employee records – the quicker the seller complies with these requests, the quicker the process will be. The seller may also be required to provide access to the business premises and allow the buyer to speak with employees, customers, and suppliers.

Negotiation

Once due diligence is complete, the parties can begin negotiating the terms of the sale. This stage involves a range of discussions between the buyer and seller, their legal advisors, and other professionals involved in the sale, including accountants and valuation experts. 

The negotiations can cover various aspects of the sale, including the purchase price, terms of payment, warranties on any assets, and any conditions that need to be met before the sale can proceed to the next stages.

Drafting legal agreements

Once the parties have agreed on the terms of the sale, the legal documents can be written up. This stage involves the preparation of various legal documents, such as a sale and purchase agreement, disclosure letter, and any of the numerous other documents that might be needed to complete the sale. 

The legal documents typically set out the agreed terms of the sale and include provisions relating to the transfer of ownership, payment of the purchase price, and a whole host of other industry specifics relevant to the sale in question.

Completion

At last, once the legal documents have been drafted and agreed upon by both sides of the sale, it’s time to sign them and complete the sale. This stage will generally involve the payment of the purchase price and the transfer of ownership of the business to the buyer. 

The completion process can take quite a few weeks, although in some cases this will depend on certain conditions being met before the sale can be completed.

Overall, the legal process of selling a business in the UK can take several months to complete, depending on various factors such as the size and complexity of the business, the level of due diligence required, and how smoothly the negotiation process goes. 

It’s important for both the buyer and seller to have experienced legal advisors, who can guide them through the process and help ensure all legal matters are fully taken care of so that neither party is left legally liable after the sale.