Preparing a business for sale starts well before a buyer makes an offer. Harper James is a UK full-service commercial law firm advising businesses on the laws of England and Wales, including corporate and M&A matters. Owners should treat preparation as a structured project covering financial information, contracts, people, intellectual property and corporate records.
Start with a document inventory and identify gaps. Buyers commonly review statutory accounts, management accounts, forecasts, tax records, customer and supplier contracts, property documents, employment agreements, share records, intellectual property registrations, insurance and regulatory materials. Check that contracts are signed, current and held in one accessible data room. Pay particular attention to change-of-control provisions, consent requirements, unusual liabilities and restrictions on assignment. A curated business resource can support the wider preparation process.
A clean corporate structure makes the transaction easier to explain and document. Confirm that the cap table is accurate, shares were properly issued, historic allotments are recorded at Companies House and any shareholder arrangements match the articles of association. Review director appointments, option schemes, loans to directors and related-party arrangements. For a business with employees, check written statements of employment particulars, holiday records, bonus arrangements, consultancy status and any disputes. Review ownership of software, trade marks, written content and other key assets, including assignments from employees and contractors.
Decide whether the proposed sale is a share sale or an asset sale, then assess the tax, commercial and operational consequences with the relevant advisers. Prepare a clear explanation of recurring revenue, customer concentration, debt, working capital and exceptional costs. Buyers will usually seek warranties and indemnities in the share purchase agreement, supported by a disclosure letter. A well-organised disclosure process gives the seller a controlled way to identify known risks rather than leaving material information to emerge late in negotiations. Agree the decision-makers, timetable, confidentiality arrangements and negotiating authority before receiving offers.
Preparation does not remove every transaction risk, but it reduces avoidable delay and improves the quality of discussions. The practical next step is a sale-readiness review that ranks issues by legal exposure, likely buyer concern, cost and time to fix. That review gives the board a realistic route from initial preparation to heads of terms, due diligence and completion.