Selling a business without a solicitor

[slclark17]

Is selling a business without a solicitor a stupid idea? I wish to sell my shop as a going concern, and there has been a lot of interest from potential buyers. There is only four months left on the lease, and my landlady is happy for me to assign it if I find someone reasonable and act as guarantor for the remaining period, and the purchaser will sign a lease along the same lines but at a higher rent (presumably at the same time, but with a start date when the old lease finishes).

Finding a solicitor is proving tricky - one has advised me that the fees are going to be so steep given the shortness of the lease remaining I would be better to just sell off my stock and close down. Others don't seem to be interested. It would be a shame to close a loved business when people might actually want to buy it.

I'm a sole trader. There are no debts, no lawsuits or skullduggery to hide. I sell only to the public so there are no contracts to worry about. There are no employees (there are free-lancers who teach here). It makes a small profit, and the potential buyers have seen the financial data, the lease, and the agreement with teachers who they have the choice whether or not to continue working with in the way they see fit. I want to basically hand over the keys, they get all the stock, fixtures and fittings, website and social media accounts. I am happy to stay on to train them for a while and not to compete with them in future. My suppliers will need to be notified, and some contracts such as card payment processing put in the purchasers name/bank account (unless they wish to start new ones), but a solicitor wouldn't do that anyway (I think). The price is open to offers - would expect a minimum of £25,000, but not megabucks.

There is a template license and deed to assign a lease from the FSB, there is even a template Purchase of Business Agreement from law depot.

Would it be crazy to sell without a solicitor?

 

[S2K]

It is possible but not recommend. Speak to a specialist. Your accountant should be able to offer some advice.

 

[The Byre]

The primary task of any contract is clarity. A good draughtsman should be able to get everything onto one piece of paper. Put everything you want, need and/or expect down in plain English and as long as both sides are happy, that should do.

A contract ain't worth a bucket of warm spit if one or other side does not intend to adhere to the conditions of the contract.

I work in a business where substantial deals are done on a handshake (though we do have to have contracts further down the line, as projects get sold on).

As long as both sides trust one another, a simple contract should do. However, I always tell people to check the other side out thoroughly (i.e.due diligence) and no deal should take effect until payment in full has been completed.

Here is a training video in how to negotiate a contract and reduce that contract down to the essentials. Follow this example to the letter and you won't go wrong -

 

[slclark17]

Thank you both for your advice.

 

[slclark17]

For the benefit of anyone in a similar position, this was sent in a private message which the sender has allowed me to share:

I would always recommend using a solicitor to just cover yourself for those worst case eventualities. I can see that you are going to enter into the transaction with the best intentions but you can never tell whether initially very friendly purchasers will come back to you at a later date and cause problems. I think this is especially important when you are a sole trader. Once you have handed the business over the last thing you would want is a spurious claim against you for something that was not your fault. The costs of dealing with this would far exceed what you would spend to get a proper agreement drawn up now.

Unfortunately I have seen it happen but I think a proper agreement would give you peace of mind that you are minimising the chances of the purchaser ever coming back to you in the future.

If you need any solicitor recommendations let me know and obviously I think you would need to make sure that, given the amount of money involved, they need to control their costs. It might be possible to agree a fixed fee.

 

[Alan]

My suppliers will need to be notified, and some contracts such as card payment processing put in the purchasers name/bank account (unless they wish to start new ones), but a solicitor wouldn't do that anyway (I think).

You are right, the solicitor wouldn't get involved in the operational transfer, all they would do is draft a sale & purchase agreement, hold money if required, and advise on any specific legal queries if required.

Assuming that your transaction isn't complex, I'm sure solicitors have boiler plate agreements so that element shouldn't cost too much.

 

[The Byre]

If a purchaser can show that you have in all likelihood deliberately hidden faults and/or liabilities or other nasty things lurking that you must have known about, there is little you can put into a contract to protect you, as they are claiming that you deliberately misled them!

What you can do (and what I always do) is to put into the contract, that the other party confirms that they have taken suitable qualified legal advice. (They almost never do, but that's their look-out!) You may add to that, an obligation by the other party to engage in certain positive actions. For example,that they have inspected the building, goods, stock, whatever and are satisfied that all is well and that the sun is shining.

In other words, the contract becomes conformation that they have taken all steps of due diligence and are satisfied and can confirm that they are satisfied.

 

[Clinton]

Would it be crazy to sell without a solicitor?

Yes!

I don't have time to go through all the reasons and explain where you could get burnt. Just pay for a decent lawyer (and I don't mean your average high street solicitor but someone who specialises in business sales).

Finding a solicitor is proving tricky - one has advised me that the fees are going to be so steep given the shortness of the lease remaining I would be better to just sell off stock and close down. Others don't seem to be interested.

Given what I do I obviously know a lot of solicitors who can assist in situations like these, and at a reasonable price. Drop me a PM with your email address if you want an intro or two.