Getting your legal house in order before a sale

Most owners know their business inside out: the customers, the numbers, the people and the quirks. What they often have not looked at for years is the paperwork that sits underneath it. Company records, contracts, ownership of assets and old agreements tend to be filed away and forgotten, because the business runs perfectly well without anyone checking them.

A buyer will check them. Not because they expect to find anything wrong, but because they need to know that what they are buying is what they think it is. Gaps that have never mattered before can suddenly take weeks to fix in the middle of a sale. A little housekeeping beforehand makes the process calmer and keeps the focus on the things that matter.

Who owns the company, exactly?

It sounds obvious, but it is one of the most common sources of delay. Share transfers from years ago may not have been recorded properly. A former partner or family member may still hold shares nobody has thought about. Share options promised informally to a manager may never have been written down, or may have been written down and then forgotten.

Check that the official register of shareholders matches what you believe the position to be, and that any changes over the years were documented and filed. If shares were gifted, inherited or bought back, make sure the paperwork is there. If something needs putting right, it is far easier to do it now than with a buyer waiting.

Company records and filings

Most companies have statutory records that should be kept up to date: minutes of board and shareholder decisions, registers of directors and shareholders, and the filings made with the companies registry. In smaller, owner-run businesses, these are often incomplete because decisions were made around a kitchen table rather than in a formal meeting.

Your accountant or solicitor can usually review these quickly and tell you what is missing. Some gaps can be tidied up with confirmatory paperwork. It is not glamorous work, but it removes an easy reason for a buyer's lawyers to raise questions.

Your key contracts

Buyers will want to see the agreements that the business depends on: major customer and supplier contracts, distribution arrangements, licences, finance agreements and any partnership or joint venture terms. Two questions matter most. Is there a written contract at all, and does it say anything about what happens if the business changes hands?

Many long-standing relationships run on a handshake or an old document nobody has reread. That is not necessarily a problem, but it helps to know where you stand. Some contracts contain change of control clauses that let the other party end the agreement or renegotiate if the company is sold. Knowing about these early means you and a buyer can plan how to handle them, rather than discovering them late.

Property, equipment and intellectual property

A buyer needs to know which assets belong to the company and which belong to you personally. Vehicles, equipment, software licences, websites and domain names are often registered in an owner's own name for convenience. Trade marks, designs and product know-how may never have been formally protected or assigned to the business.

Make a simple list of the assets the business relies on and who legally owns each one. Where something important sits outside the company, decide whether it should be moved in before a sale or dealt with as part of it. The same applies to work created for the business by contractors or designers, where ownership of the result may need confirming in writing.

Employment paperwork

Every employee should have a written contract or statement of terms, and the business should be able to show that people are paid and treated in line with them. Buyers will also look at any bonus or commission promises, company car or benefit arrangements, and any ongoing disputes or grievances.

If key people have no contract, or old contracts that no longer reflect how they work, it is worth bringing these up to date in a measured way. This is not about changing anyone's terms before a sale. It is about making sure what is written down matches what actually happens.

Disputes, permits and loose ends

Finally, think about anything that might still be open. A disagreement with a customer or former employee, a warranty claim, an unresolved issue with a landlord or a regulator. Check that any licences, permits or accreditations the business needs are current and held in the company's name.

None of these needs to be resolved perfectly before you sell. But a buyer will ask, and it is much better to raise known issues yourself, with a clear explanation, than to have them surface during due diligence.

A short checklist

If you want somewhere to start, these are the points we would look at first:

• Shareholdings match the official register, with paperwork for every past change.
• Board and shareholder records and filings are complete and up to date.
• Key customer, supplier and finance contracts are written down and you know which contain change of control terms.
• Important assets, including intellectual property and domain names, are owned by the company or clearly identified.
• Every employee has a current written contract, and bonus or benefit promises are recorded.
• Licences and permits are current, and any open disputes are listed with a short explanation.

Why starting early helps

Most of this work is straightforward, but some of it depends on other people: a former shareholder signing a document, a customer agreeing to update a contract, or a registry processing a filing. That takes time. Starting six to twelve months before you plan to sell gives you room to deal with it at your own pace, rather than under the pressure of a deadline.

It also changes the tone of a sale. When a buyer's questions can be answered quickly and cleanly, trust builds on both sides and the conversation stays on the business itself.

How we approach this

As a long-term buyer, we do not expect a privately owned business to have perfect paperwork. We would much rather an owner tells us early about anything that needs tidying, so we can work through it together and keep the process moving. If you are thinking about a sale and would like a private conversation about where to start, a short call is a good first step. There is no obligation either way.