When business owners start thinking about selling their business, most focus on one question: will I be able to find a buyer?

In reality, finding a willing buyer is often only the beginning.

Many business sales fail after a buyer has been identified, a price has been agreed and both parties are keen to proceed. Deals can be delayed, renegotiated or abandoned altogether when issues emerge during due diligence, key information is missing or unresolved risks come to light at a late stage.

For business owners considering an exit, preparing the business properly can be just as important as finding the right purchaser.

Why Business Sales Fall Through

A buyer will want to understand exactly what they are purchasing and any risks they may be inheriting.

During the transaction process, buyers and their advisers will typically undertake detailed due diligence, reviewing everything from contracts and corporate records to employment matters and regulatory compliance.

Common issues that can derail a transaction include:

• Missing or outdated commercial contracts
• Unclear ownership structures
• Poorly maintained company records
• Ongoing disputes
• Intellectual property concerns
• Regulatory or compliance issues
• Key customer or supplier relationships that are not properly documented

Even where a sale proceeds, such issues can result in reduced valuations, more onerous contractual protections for the buyer or lengthy delays.

Preparation Creates Value

Many business owners spend years building a successful company but only start preparing for a sale when they are ready to exit.

The most successful transactions are often those that have been planned well in advance.

Early preparation allows businesses to:

• Address potential issues before they become obstacles
• Strengthen governance and record-keeping
• Review key contracts and commercial arrangements
• Resolve disputes and liabilities
• Present the business in the best possible light to prospective buyers

A well-prepared business is typically easier to sell and often better placed to achieve a favourable outcome.

More Than Just Agreeing a Price

A successful transaction involves much more than agreeing the headline purchase price.

Business owners should also consider:

• Transaction structure
• Asset sale versus share sale considerations
• Tax implications
• Warranties and indemnities
• Earn-out arrangements
• The structure of any security for deferred consideration
• Restrictive covenants
• Post-completion obligations

Taking advice at an early stage can help identify the most appropriate approach and reduce the risk of unexpected complications later in the process.

Expert Insight

"Many business owners assume the hardest part of selling a business is finding the right buyer. In reality, some of the biggest challenges arise after a buyer has been identified. Deals frequently become delayed or fall apart because issues are only discovered during due diligence. Businesses that take the time to prepare properly and seek advice early are often in a much stronger position to achieve a successful outcome."

Ben Jackson, Partner, Eaton Smith Solicitors

How Eaton Smith Can Help

Whether you are considering a future exit, have already identified a buyer or are actively negotiating a transaction, Eaton Smith's Corporate & Commercial team can provide practical legal advice throughout the process.

We regularly advise on:

• Business sales and acquisitions
• Share sales and asset sales
• Management buy-outs and management buy-ins
• Mergers and corporate restructuring
• Due diligence
• Transaction documentation and negotiations

For more information, visit our Buying and Selling a Business service page or speak to a member of our Corporate & Commercial team.