In an average year, over 1,600 businesses are sold in the UK.
For SMEs, which account for over 99% of the UK business population, the sales process can be challenging, as smaller teams often lack the internal resources to successfully navigate tax and legal requirements.
When structured to ensure all parties know what to expect at what times and what’s needed from all stakeholders, sales can be streamlined and benefits can be enjoyed by both current and future owners.
To ensure a smooth transition, professional guidance is a major necessity.
For small and medium-sized business owners exploring sales options, in this post, we explore the top professional partners every SME should consider before buying or selling a business.
Top professional partners for an effective SME support team
For both parties, the sales process can be complicated, so identifying and partnering with a team of experienced professionals is a necessity.
While it is possible to find trusted partners separately, for SMEs, it’s often wise to work with a firm that provides comprehensive support.
Multidisciplinary firms like Accounts and Legal, for example, offer professional support across both accounting and legal elements of business sales. By working with a team that integrates into existing structures, you can gain tailored support in the below areas from a single source.
M&A advisors
External mergers and acquisitions (M&A) advisors are a key part of any well-structured sales process. Just like how an estate agent helps a property owner to sell a home, M&A advisors take on the more complex aspects of business sales to help smoothen the transition process.
A good M&A advisor will help SME owners to:
● Secure a fair price for their business through accurate business valuations.
● Ensure a smooth transition process by identifying and vetting prospective buyers.
● Guide the sales process by leading negotiations and structuring the final deal.
For business owners who are engaging in their first sale, are unsure of the true value of their business and want to ensure that the sales process runs as efficiently as possible, partnering with a seasoned M&A advisor should be viewed as a top priority and explored with immediacy.
Business acquisition solicitors
Business acquisition solicitors are experienced corporate lawyers who can manage the legal aspects of a business sale.
A good business acquisition solicitor will represent the seller’s interests in the structuring of the deal to minimise legal liabilities and ensure an efficient sale.
Business acquisition solicitors can help both sellers and buyers with:
● Deal terms: Business acquisition solicitors can negotiate key components of deals like warranties and indemnities to protect stakeholders from post-completion claims.
● Contract negotiations: Solicitors can draft key contracts like non-disclosure and share purchase agreements to ensure assets are accurately identified and described.
● Compliance management: Professionals can cross-reference agreements against tax, company and competition laws to help ensure deals remain legally compliant.
Chartered accountants
Chartered accountants offer tailored advice and support with regard to the tax implications of business sales.
Working with these professionals is critical for SME owners who want to make sure that due diligence is performed correctly and hidden financial risks are reliably identified.
For sellers, chartered accountants offer guidance with:
● Valuation: Professionals analyse historic company accounts and leverage advanced financial modelling processes to help identify and justify a top-market asking price.
● Due diligence: Chartered accountants can identify and address internal financial reporting issues before prospective buyers do to prevent unforeseen price reductions.
● Tax planning: Professionals can help to structure the disposal of a business in such a way that tax burdens are minimised and the highest possible net retention is achieved.
For buyers, chartered accountants can assist with:
● Investigations: Professionals can investigate beyond surface-level figures to verify profit accounts and identify hidden contractual obligations that may complicate sales.
● Risk management: Chartered accountants can identify liabilities like contingent debt or pending litigation that can be used to negotiate protective clauses in final contracts.
● Deal structuring: Professionals can determine whether an asset or a share purchase agreement is most appropriate to shield buyers against risk and tax implications.
Final thoughts
Navigating the sale of a business can be uniquely difficult for SMEs, typically necessitating external support from experienced professionals.
By working with a multidisciplinary practice that provides both legal and accounting support, business owners can integrate experienced professionals into internal teams to help guide seamless, compliant and fair business sales.
