Pitfalls to Avoid When Selling a Business


If you have a business for sale then then this can be quite a stressful and time-consuming period in your life. Getting this wrong could have some serious implications which could affect finances, credibility and employees.  If you have spent many years building up a business from scratch the last thing you want to see is the business fail at any level.  Getting the right advice and guidance along the way is important.   Here are some of our scribbled down notes of some pitfalls to avoid when selling on your business.

Inaccurate Valuation

Get this wrong from the start then you are in trouble.  Clearly you will be looking for the best possible valuation in order to feel your hard work in the business is being rewarded by the sale however remember that the people looking to buy a business are also looking for best possible deal in order to bank in on a bargain.  There are far more businesses for sale than there are people on the lookout to buy.  If you go online looking to buy a business in almost any sector then you will usually be overwhelmed with the number of companies that are for sale.  When getting a valuation, the P/E is usually a good indicator but also things like your company assets, any debt and liabilities are taken into consideration by potential buyers.

Inaccurate / Out of Date Documents

This sounds really simple but it’s sometimes the simple things that can cause confusion or delays when trying to sell a business online.  As such, our advice to you is to review your documents in detail to ensure they are up to date and accurate.  This would include things such as:

  • Company Annual Returns – accurate and submitted.
  • VAT returns – reference details, up to date
  • Loans / Debt – Terms of loans, no arrears, payment terms.
  • Company House – Address up to date, shareholders holdings accurate, returns submitted.
  • Asset list – Full accurate list of assets

If you spot an error in any of these then you should stop and fix immediately.  Getting something on these documents wrong can have legal implications on a transfer (or spotted once a transfer is completed).

Don’t lie to your staff

This can be a stressful and eventful time for your staff.  If they “hear through the grapevine” that the company they work for is going for sale then immediate panic could set in.  It’s really important that you keep them informed about the situation and that you do your best to give them any reassurances about their current job positions.  If there is doubt about their job security then this should be discussed with the new buyers so you can be open with the affected employees.  If you don’t do this there could be serious consequences such as staff feeling aggrieved and could lead to unethical actions from them.  In summary, put yourself in their shoes.  Treat them as you would like to be treated.