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Getting your Ducks in a Row Prior to Investment or Exit


The next chapter for your business may involve raising finance from external investment, be that through debt or equity, making your exit for your next project or stepping away from your business as your career reaches its twilight.

Whatever the purpose of your transaction, the key is to keep the process as efficient as possible in respect of time, effort and, most importantly, cost! The due diligence and disclosure process of any transaction can be viewed as laborious, repetitive and time consuming; however these processes can be streamlined through straightforward preparation. There are simple steps that can be taken to prepare your business for impending change and protect the value of the business in the eyes of any potential buyers, investors or financiers.

Commercial contracts

Know your commercial contracts. The scope of your commercial contracts is likely to be very wide ranging from your relations with your most important customers and suppliers, your debt funding documents, to the lease of the photocopier and water cooler. Fundamentally, ensure you have signed dated copies in original form or a scan of all contracts. Be aware of termination trigger events including any consent required for a change of control of your business, consider the term of the contract and be wary of any onerous or unusual terms of any of your contracts. Consider any security granted over any of your business or assets and if and how this will be released prior to or at completion of your transaction.


Tidy up and keep up to date all employee and personnel records. Note if any employee is absent for long periods, is on maternity (or other) leave or is subject to any disciplinary issues. Implement signed terms of employment for all employees, be this bespoke contracts of employment or your standard terms and conditions of employment. Update and roll out your health and safety, environmental, anti-bribery and other policies and have them prepared to disclose.

Statutory books

Where are they? If they are held by your accountant or solicitor, ask for them to be reviewed and updated to reflect the current shareholdings, directorships, allotments and transfers and persons with significant control in the business (for more information on ‘PSC’s’click here). Document all board meetings with the appropriate minutes and ratify all decisions of the members of the company with the requisite resolutions. This is particularly relevant if your remuneration is also made up of dividends.

Your Premises

Do you own the freehold? Are the premises subject to a lease? Ensure that you have all planning permissions, environmental consents and other authorisations required to carry on your business. Notify your landlord of the proposed transaction, and approach them as early as possible for any consent to assignment of the existing lease that is required. Should you own the freehold and be exiting with a new lease being granted, consider the leasehold terms that you will be offering and how you will secure and protect your income from the new tenant.

Intellectual Property

Be aware of all intellectual property owned, licensed, assigned by or to you or your Company whether registered or unregistered. Protecting the value of these intangible assets is imperative, along with obtaining good root of title to make sure these assets are yours to sell or assign. Protect any IP created by employees during their employment by including robust assignment provisions within their employment contracts. Ensure that registration of your domain names vests in the correct person and that all content associated with the domain is formally assigned to the Company. Documenting and recording any items of intellectual property licensed to you or your Company helps managing risk when it comes to warranty and indemnity protection a buyer may require. A record of all valid and subsisting licences can avoid the need for certain disclosures and reduce your exposure to any intellectual property related claims.

Third Party Consents

Identify at an early stage whether completion of your deal will be conditional on third party consents. For example, regulatory or statutory approvals, stakeholder approval, assignment/ novation of major contracts etc. Factor into your deal timetable the time it will take to obtain such consents and comply with any conditions that may be attached.

Tax Planning

Last, but not least, ask your accountant to consider the tax implications of your deal for you personally and for your business. It’s important to structure any deal to make best use of the tax reliefs and savings that can be generally available on a deal. For example, ensuring on a share sale that all stakeholders will qualify for ‘entrepreneurs’ relief and lock into a 10% Capital Gains Tax (CGT).