Tips and traps for selling your business (Part 4 of 4) – It’s not over until it’s over

In our first 3 blogs “Proper preparation prevents poor performance”, “Get your backyard in order” and “Transaction documents” we set out our top 10 tips and traps for sellers to consider when they are proposing to sell their business.  Our final 2 tips concern completion and post-completion.

Tip 11 - Deal isn’t done until completion occurs

• Keep the pressure on after signing and use a “completion agenda”.  People often fall into the trap of thinking that the deal is done once a sale and purchase agreement is signed, but that is often not the case and a lot of work still needs to be done, such as satisfying conditions precedent and getting ready for completion.
• Don’t announce early, unless you have to as a matter of law (e.g. ASX listing rules) or other reasons (e.g. word gets out about the deal and clarification is necessary).  A seller can often lose bargaining power if news of the deal gets out.  In such circumstances the seller often can’t afford for the deal not to go through to completion and therefore may feel they need to waive conditions precedent or accept half-performed completion steps.
• Start the process early for the release of registrations on the Personal Property Security Register.  The buyer will likely require all PPSR registrations to be released prior to or at completion and it can be difficult to convince third parties that hold PPSR registrations over a target business to release those registrations quickly (as there is often no incentive for them to do so).  There may also be large numbers of historical registrations that haven’t been released and reconciling all of the registrations can be time consuming.

Tip 12 - Don’t forget post-completion steps after the champagne is popped

• These could include ASIC filings, asset transfers (e.g. motor vehicles), escrow arrangements, completion accounts preparation, assistance from the seller after completion, non-competition restraints, and warranty claim periods.
• Prepare a timetable of post-completion steps and diarise the relevant dates.

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For more information, please contact any member of the Sierra Legal team, whose contact details can be found here - LINK.

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