This first stage includes determining if the sale should be a share sale or an asset sale, establishing any debt or outstanding claims there may be against the business, and any issues surrounding IP. This would also be the time to discuss how current management would be involved in the handover. Finally, this stage is also where the payment schedule and structure is determined, with options such as an earn out or vendor’s loan note.

This is the point at which some key agreements are signed - including an exclusivity agreement, heads of terms (sometimes referred to as a letter of intent or memorandum of understanding) and possibly a further confidentiality agreement. This is also the point at which lawyers typically get involved but it’s not unusual for them to be around earlier in the process.

The due diligence process is the detailed investigation of the company covering the business, legal and financial aspects and it can have an impact on the negotiations and final sale price. Often this is the time when any warranties (promising information is correct) and/or indemnities (promising to reimburse the buyer if any particular liabilities arise) are established.

After due diligence is complete, the more granular issues are sorted out, such as employee pension arrangements, property, IT, IP etc. This stage is also the point at which any necessary consents or approvals are arranged with your Board/shareholders or any relevant regulatory bodies.

With all the necessary negotiations, due diligence and arrangements complete, the rather exciting point of signing finally arrives. There are numerous official documents that need to be signed, but the key document will be the Asset or Share Purchase Agreement.

With the company officially sold, various necessary filings and returns are dealt with, and the company’s customers, suppliers and other stakeholders are informed of the sale, with any introductions made as necessary. There is usually a handover period, and any agreed ongoing obligations are also fulfilled.