Sponsored Article
IF YOU ARE planning to sell your business to your management team, agreeing the terms of the deal is just the beginning.
“Agreeing your MBO sale in principle is only the start,” says Tom Bodkin, a partner in the corporate and commercial team with Borneo Martell Turner Coulston. “To ensure successful completion, you have to remain focused on the detail and drive the sale through to the end.”
Tom pictured right highlights some key tips to reduce the chances of a management buyout deal failing, and to ensure you are in the strongest negotiating position.
Early disclosure
The buyers must understand the fundamentals of the business from an early stage, so that they can make an informed decision as to whether to proceed with the purchase and how to fund it.
It is usually a good idea to disclose key information, such as the overall financial picture, sooner rather than later. This allows the buyers the opportunity to prepare for the transaction properly.
Be helpful with due diligence
At the due diligence stage there will typically be a mountain of enquiries and requests for documentation. It is usually best to be helpful and supportive during this stage, taking the view that due diligence is a routine and entirely normal part of any business sale transaction.
Warranties and indemnities
It is entirely normal for the buyers to ask for a series of warranties and indemnities in the business sale and purchase agreement.
In this context, warranties are contractual promises or assurances that you as a seller are making about the state of the business and the veracity of the information and documentation that you have disclosed.
Indemnities are agreements to meet certain liabilities on behalf of the buyer in the event of them arising at some point in the future. These liabilities may cover such matters as taxation, litigation or employment claims arising from events occurring before completion.
How we can help
If you are planning to sell your business by way of a management buyout, it is best to engage solicitors at the very start so that you get the most benefit.
For an informal discussion, contact Tom Bodkin in the corporate and commercial team on 01604 622101 or email
This article is for general information only and does not constitute legal or professional advice.
Please note that the law may have changed since this article was published.
………………………………………………………………………………
