Inform Magazine

05. SELLING YOUR ASSETS By selling assets, we are not merely referring to buildings, machinery, equipment, furniture and other fixtures and fittings. The term also applies to intellectual property, accounts receivable, investments and even goodwill.

hichever type of business exit strategy you are planning, various factors need to be addressed for the transaction to be completed successfully.

A full sale is not the only option available. Some business owners decide they no longer want the responsibilities of controlling a company and agree a deal where they retain a shareholding and a less senior executive role, perhaps serving a ‘handover’ period for a certain length of time. Or they may have reached the point when retirement has become a very appealing prospect, whereas those not yet ready to wind down may be eager to begin a new business project in a different sector. The decision to sell could even be purely down to the market outlook with companies of a specific type in high demand. And there are different kinds of company sale - potential acquirers include existing business partners and family members, while trade buyers may be seeking to expand their market reach or add a greater range of products or services to their current portfolio. 01. ESTABLISHING A VALUATION The value of your company depends to an extent on how much a buyer is willing to pay for it. But we know how to identify the key value drivers which can be highlighted to attract and nurture the most appropriate, motivated acquirers to generate a competitive bidding environment, using comparisons with equivalent company sales in your sector. 02. SELLING YOUR SHARES When you sell your company, the transaction will necessitate the transfer of shares to the buyer for an agreed value. If the acquirer is a third party unconnected to the business, all shareholders will have to agree to sell their shares to complete a full sale. Also transferred to the new owners will be the company’s assets and liabilities. Assets can either be valued separately to the shares or bundled together, but any debts attached to the business will be factored into negotiations by the acquirer. 03. PARTIAL BUSINESS SALES You may decide you want to sell your company only partially, thus remaining as a shareholder – but there are aspects of this which you need to bear in mind. Potential issues surround the other people involved in, or affected by, the sale. For example, how will you divide responsibilities with the new part owner? This may require a shareholders’ agreement to avert complications, while any staff being directly impacted will need to be informed before the change of ownership happens to prevent any breach of employees’ rights. 04. SHAREHOLDER PRE-EMPTION RIGHTS Depending on what is contained in your company’s Articles of Association or Memorandum of Association, there could be restrictions on the transfer of shares whereby the shares you want to sell or transfer must first be offered to a specific body of individuals, usually the other remaining shareholders. In other words, if such a restriction has been legally stipulated, you must offer any fellow shareholders a first right of refusal before you can sell your shares to an outsider. We outline 10 steps required in the sale process of your company and how KBS Corporate can help you to navigate them.

Thought should be given to what each individual asset is worth to determine the total value of the business when selling a company.

06. TRANSFER OF LIABILITIES This refers to financial commitments such as accounts payable, salaries, taxes and loans, which become the responsibility of the new owner when you sell your limited company. These liabilities will be scrutinised by the acquirer as part of their due diligence process before the transaction is completed, so it is advisable to settle as many debts as possible and present the clearest and most accurate picture of the company’s financial situation. 07. POTENTIAL BUYER BACKGROUND CHECKS We can help you with all the points listed here, but joining forces with KBS Corporate will save you a great deal of time and effort with this one especially. Identifying a buyer who is readily able to demonstrate proof of funding for their acquisition is something we take extremely seriously, and we will conduct all the necessary credit checks and investigation and commission the required legal documents to that effect. 08. SAFEGUARDING THE COMPANY This is another area where you can be assured KBS Corporate have got your back. In the undesirable event of your sale breaking down, we will have ensured you are protected by a Non-Disclosure Agreement (NDA) which blocks any confidential information being disclosed. If any of that data was used by the other party for the benefit of their own business or for any other commercial gain, in contravention of the NDA, you would be protected legally. 09. CAPITAL GAINS TAX A capital gain is the profit you make when selling a company in comparison to the amount you paid for it. The tax you pay will be calculated on the amount of profit, not the overall funds received from the sale. However, you may qualify for Business Asset Disposable Relief, which means you would pay a lower Capital Gains Tax rate of 10% on the first £1million rather than 20%. 10. INFORM COMPANIES HOUSE Once the transfer of shares to the new owner has been completed, Companies House must be informed of a change to where the company’s records are kept and the identities of any new directors or company secretaries within 14 days. The time limit is 15 days to inform Companies House about changes to your constitution or Articles of Association, one month if you issue more shares in your company, and 21 days for all other changes.

You will also need to inform HMRC by completing a company tax return to cover the accounting period up to the sale date.

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