We have recently seen Harry and Meghan announce they are leaving the “Firm” and living a more quiet life, leaving all the headaches of royal life behind.
It’s important to get legal advice when you sell a business so you do not get any legal headaches after you do.
There are many things that a lawyer can check to ensure you don’t have any continuing exposure to the business.
You must ensure that the Lease has been properly transferred to the new owner or you or your Company might have a continuing liability to pay the rent.
If the Lease is in a company name you also need to make sure that you receive back any cash bonds you have paid the Landlord and get a Release of any personal guarantees.
If the new owner goes bust the Landlord will check whether they have any rights to have the rent paid by you.
Contracts with suppliers
You need to ensure that you have properly ceased trading with all of your suppliers so you don’t have any outstanding obligations to pay them any further money after the sale. You need to check your contracts with them to make sure you also don’t have any continuing personal guarantees for the business.
These contracts may be for telephones, cleaners, IT storage, IT suppliers, stationary, website, marketing, advertising etc. The list goes on and on. We have seen photocopier contracts and telephone contracts trip up outgoing sellers where they can’t get out of personal guarantees they have signed in the past. A warning to carefully read any contracts you sign for the business.
You need to know what your obligations are to your employees both those staying with the buyer and those that aren’t. Are you liable for long service leave, personal leave or other entitlements and how is it calculated?
Have you properly terminated / transferred your contracts so you don’t have a continuing obligation to pay bills for the businesses telephone, IT storage and maintenance, website domain etc.
It’s important to be careful about what you are taking and what you are leaving for things like data, Patents, trademarks and other intellectual property.
A careful review of the loans of the business will be required to see how you are released from any liability from any business debt.
Stocktake / goods delivered but unpaid
Have you had the contract carefully drafted to make sure you are getting what you think you are e.g. if you have delivered goods to a customer but are yet to be paid, do you get the proceeds or does the business buyer.
While Harry might have Charles for financial support, a business seller needs to get what they can from the sale of the business and ensure they don’t have any ongoing exposure to what they’ve left behind.