Selling a business - what legalitites to conform to?

[mattley23]

Hi all,

anyone care to inform me of any legal issues when selling an internet based company.

I am sole owner of the business which has been trading for 2 years in the extreme sports clothing industry. The business has a growing database of customers, stockists, a fully functional ecommerce website, stock, promotional material and suppliers lists & accounts.

I plan to sell 90(ish)% of the company and retain 10(ish)% ownership as the sale is pretty much a forced sale due to other commitments to my other bricks and mortar business and growing family.

Hope someone can help, please feel free to ask any questions.

[Jayne]

Hi,

I would think it's the same as selling any other business. You would need to get a solicitor to draw up a contract of sale and do all the legal stuff.

Most solicitors give 30mins free advice to start with, maybe go and see one first before putting it on the market.

Jayne :D

[Steve Roberts]

Selling businesses is what my company does - about one per week. It depends on the value of the company, but the following procedures are what we do (for larger companies):

Contact a number of potential buyers, with a view to "generating a market" - therefore increasing the price.

Compose an "information memorandum", a document which gives details of the company and its future potential.

Get interested parties to sign non disclosure agreements, following which send them the Information Memorandum.

Meet the interested companies and invite offers.

Negotiate offers upwards.

Select the preferred bidder.

Draw up "Heads of terms", which is a reasonably detailed document, outlining what the offer means. The only legally binding aspect of the document is the "exclusivity period" which the buyer will enter into.

The buyer will carry out "due diligence", which means they'll be given access to the company's accounts, commercial information, etc..

The lawyers will draw up the "Sale & Purchase" agreement, following due diligence.

After a bit more haggling the sale is completed!

[VeryMark]

We can recommend several firms of solicitors in the West Midlands who can handle the legal side.