Smooth your sale
Selling your pub is one of the most important transactions you will ever undertake.
By taking a structured approach, you can dramatically reduce the length of time it takes to complete the sale. Preparation is the key to a smooth transaction.
Here are some guidelines for making the process as painless as possible.
Understand the process
If you choose, as indeed you should, a solicitor who is well practised in the sale of licensed property, they will have much more experience in buying and selling pubs than you. However, make sure they thoroughly explain the process you're about to embark upon together.
Your solicitor should take time to understand what you're selling and why, identify your buyer's likely concerns and advise how best to deal with them fairly without confrontation. He should tell you exactly what documents he needs from you and the timescale and the costs you should realistically budget for.
His priority should be to prepare a comprehensive pack of information.
He can then concentrate his time and effort on resolving problems as soon as they arise and on pushing the sale through.
Get your paperwork together
Nothing holds up a transaction quite like missing paperwork, incomplete paperwork or paperwork coming in fits and starts.
Make sure you get your paperwork together as soon as you decide to sell. If there are any obvious holes, you should have an explanation why the paperwork is missing.
Your buyer and their solicitors will want to see the following:- Accounts for the past three years, management or monthly accounts from the end of the last accounting period to now and 12 months' VAT returns- Employment records for all employees, including contracts of employment, staff handbook, details of any disciplinary or grievance action taken in respect of any employees, PAYE and National Insurance details and details of staff who live in- Contracts with suppliers- Copy of your premises licence- Company records (if you are selling a company, rather than assets)- Copy of fire risk assessment, asbestos audit, Disability Discrimination Act audit, electrical and gas certificates.
If you are asked during the transaction for any other paperwork, provide it promptly.
Get heads of agreement
The heads of agreement contains the main details of the transaction, including the details of the parties and the price that will be paid.
Most good agents will put this together as a matter of course. If you are involved in anything remotely complicated, such as instalment payments, make sure that these terms are included.
Make your inventory
Your business is likely to have more assets than you are aware of - the role of stocktaker is invaluable.
Think about the staff
You need to consider informing your staff that you intend to sell. If you do, some may leave for pastures new, making the sale more difficult, and trading is often affected.You must also identify and disclose to the buyer information on your staff under the TUPE regulations, which protect the rights of employees transferred from one employer to another. Get advice from your solicitor before you undertake this process, in order to avoid costly mistakes.
Dilapidations
It is vital, from your perspective, that any outstanding repairs are identified at the outset.
The landlord will want to ensure that either you or the buyer will put the property into a proper state of repair and will, as a condition of allowing the sale to proceed, require outstanding repairs to be dealt with by you or the buyer. You should be prepared to renegotiate the purchase price so it reflects a fair balance between the parties' expectations, or you may risk losing the deal.
Be realisticThe sale of a property or business can be a lengthy process.
Much of the work that will need to be done will mean that things take time and while your end of the deal seems to be progressing well, spare a thought for the purchaser - they and their solicitor are required to carry out a great deal of investigation before they are in a position to proceed.
And finally, a few tips:
- Set realistic expectations and timeframes
- Be prepared to negotiate fairly and reasonably
- Don't withhold information from your solicitor. If in doubt tell him - he's on your side - and get his advice as early as possible
- If you are a tenant, remember your landlord can insist you guarantee your buyer will pay the rent and comply with the terms of your lease. Make sure your solicitor explains the full extent of this liability to you
- Check you will have enough to pay off all the debts and liabilities of the business on completion, including your agent's and legal costs
- Speak to your accountant at an early stage about how best to save tax on the sale proceeds.
Minesh Patel is a partner at solicitors Stevensdrake
