selling a company - how does it work?

[Julie Clare]

I have been approached by someone who wishes to buy my business ( a limited company). After taking tax advice I will probably go for a sale of shares rather than a sale of business assets. My business has a healthy bank account + outstanding cutomer accounts and pays the usual vat and paye/nic bills etc. etc. A goodwill figure has been agreed.

So how does the sale work? Do I collect in all the cash, pay off the bills then empty the bank account or do I simply receive an amount from the buyer at some agreed date and hand over my shares?

Also let's say I agree to sell my shares on 31st December this year. My accountant says accounts have to be drawn up to that date but it will be a further few weeks down the line before we know the figures. How do we allow for this?

[Peter Bowen]

Hi Julie,

Although this seems like a simple way to do it could easily end in a disaster. If you've signed any personal sureties for your business you will not automatically be released from these. There are several other reasons for not doing it this way and very few good reasons for just selling the shares.

It's probably worth getting some specialist advice about how best to structure the sale of the business from a tax perspective too.


I suggest that you take a look at this article by Mark Corke - he is an experience business broker

http://www.suitegum.co.za/Downloads/...20mistakes.pdf

Cheers

Pete

[Julie Clare]

Thank you Peter.