The first rule for the seller is the same as for the buyer: the sale needs to be carefully planned and prepared in advance and, as far as possible, the various legal, strategic, tax and business-related questions raised by the transaction should be examined and answered beforehand.
As a seller, it is a good idea to look at your company from the potential buyer’s perspective, and to analyse its strengths and weaknesses and possible liability risks in advance of any transaction. This can be done in a vendor due diligence review. It is also advisable to obtain a business valuation with a view to achieving as high a sale price as possible. This gives you a realistic assessment of your asking price and offers from potential buyers and enables you to focus your negotiations.
The seller often has to disclose sensitive business data to the buyer for the purpose of its due diligence review. Two key considerations for the seller here are, firstly, what data to select and, secondly, how to ensure it remains confidential. It is standard practice here for potential buyers to sign a non-disclosure agreement, which should be carefully formulated. If you use a digital data room, in which documents are placed for the purposes of the due diligence and are updated as necessary, IT security also has an important role to play as far as confidentiality is concerned.
The same applies to the letter of intent, a preliminary agreement between you as seller and the potential buyers that is often signed before due diligence is carried out. The letter of intent is a signal of a potential buyer’s interest – initially without obligation – in acquiring your company. Because a key factor for you as seller is the ability to plan the transaction with certainty, the letter of intent should be reviewed by a lawyer and you should seek legal advice during parallel or subsequent contract negotiations. This helps ensure that the transaction has the desired outcome for you as seller.
