The similarities among trades, professions and services that make it are well-known: hard work, an understanding of one’s market, forward planning and common sense.

A business can take years to build up from a standing start to profit and wealth. That requires the owner and managers to make the right decisions time after time as the enterprise grows and develops. The rewards are income, value, reputation, and solid status. But what happens when the proprietor wants to get out, either to spend the hard-won wealth on a comfortable retirement or has just had enough of all the hassle, pressure and grinding detail over many years?

A full description of this subject would take much longer than this article has available. Indeed books have been written on the many aspects of commercial sale. But one essential element of gearing up to sell out, or sell off, is legal advice and representation. What can a solicitor do to help the client who is shaping up to retire? Lawyers in this area of practice deal with such transactions all the time. Several basics need to be known before any forward steps are taken.

1. Who owns the business?

This may seem an obvious thing, but may not be so simple. For example, if the commercial operation is conducted by the successful business person hands-on but under a limited company structure, the shares may not be owned by the same people as the director(s) – or there may be a group of minority shareholders who all need to consent to the sale and formally vote it through. Some entrepreneurs put businesses in the name of a spouse or children for tax or other reasons – it is those legal owners who will have to sign off on any sale, so cannot be taken for granted. There may be bank securities or other lender issues to be understood and accommodated. So the solicitor needs to know the full ownership structure of the firm.

2. What is the business actually worth?

The introduction to this work is predicated on a successful retirement, but there may be various reasons to sell a business, including debt, illness, age, family pressure, competitor pressure and more. The solicitor needs to know – whether from the client or the accountant or a business consultant – what the true value and likely price will be, as this will inform or dictate tactics, to a great extent. It also needs to be clear what can be disclosed to the buyer or the buyer’s lawyers, and what should be kept back.

3. Tax

Is the business up-to-date with its fiscal liabilities, and is it a ‘clean’ sale? What is the status of the assets under the client’s ownership? One aspect of this is where there is property involved, either owned by the business or leased. Any price paid has to take account of VAT – for example, if the property has been opted to tax (i.e. VAT is attached to it and charged on rent and costs) then the agreement for sale needs to take account of this, so that 20% of the price is not whipped off on receipt by the seller. It is almost axiomatic that the solicitor has to liaise with the business’s accountants and financial advisers to ensure the sale agreement ticks all the tax boxes - and there are no nasty surprises.

4. People

If the business for sale employs staff, there are specific rules (known as TUPE – Transfer of Undertakings (Protection of Employment) Regulations 2006) to account for them transferring - or not – over to the new ownership. Mistakes cannot be made here. Not only is a job an extremely important thing for anyone in it, the penalties and liabilities for getting it wrong are considerable if a case ends up at an Employment Tribunal because the buyer has unlawfully sacked the employees he doesn’t want.

5. Time

A deal done in principle between buyer and seller may give them unrealistic expectations of how long it will take to come to fruition. For a properly conducted business sale, there are no shortcuts. One could make use of the cliché, ‘It’s a marathon, not a sprint’. Whether the price is millions or even just thousands, care has to be taken at every turn.

Indeed rather than a running race, the best analogy may be a snooker match. Every ball/every legal step has to be lined up and taken in the correct order until the rules/the legal requirements are met, and only when the black is sunk, as it were, can everyone sit back and relax.

6. Communication

There will likely be dynamic aspects to the sale. Things will change, the deal may be tweaked as it goes along, perhaps when the buyer delves more deeply into the details of trading, customer base, financial strength or any one or more of a host of issues attached to the business. Indeed the buyer’s position may change because of its own needs, pressures or development. The legal teams need to keep closely up to date with their own clients and each other. And for quotes, one may add, ‘Expect the unexpected’.

Until the transaction completes, there are no certainties, and the solicitor’s job includes the ability to react, and change tack where needed.

These are the principles, the basics. Given that every sale is unique, and disposing of a hotel is different from selling an architect’s practice or a glazing business and so on, it is impossible to diagnose all steps and issues. But if the parties adhere to the general principles, the actual conduct of the business sale will be on a sound footing.