We’re helping quite a few business owners sell their companies at the moment. For most, it’s their first sale, and something we keep coming across is paperwork that hasn’t kept up with the business.
It’s easily done. You’re busy running the company, a shareholder leaves or some shares change hands, and everyone assumes the accountant or solicitor has sorted it.
Years later, a buyer’s lawyers start asking questions and it turns out there are gaps.
The hidden trap of outdated company paperwork
One area that regularly causes headaches is the company’s statutory books, particularly the records of who owns the shares and how that ownership has changed.
It might be a missing stock transfer form, incomplete paperwork for a share buyback, or a register of members that hasn’t been updated. Whatever the issue, you really don’t want to be finding out about it when you’re trying to get a sale over the line.
We’ve seen these problems delay completion by weeks and, in a couple of cases, put the sale itself at risk. Sorting them out under pressure adds cost and stress at a time when you’ve already got plenty to think about.
Accounting support
There’s also a wider point here about the advisers around you. The accountant who helped you get started may still be doing a great job looking after the business, but do they have the experience and capacity to support a sale?
We work with some excellent accountants, including plenty who are very experienced in transactions. It’s worth having that conversation with yours early, so you know where you might need extra support.
If a sale is on your radar or even a few years away, i’d suggest:
- Getting your company’s share ownership records checked, including whether they’re consistent with the relevant Companies House filings.
- Making sure you have the supporting paperwork for previous share transfers, allotments and buybacks.
- Asking your advisers about their experience of helping owners sell and who would actually handle the work.
These things are much easier to deal with before a buyer is involved.
Planning a business exit?
Don’t let unrecorded shares or outdated paperwork disrupt your hard work. Contact the team at Hybrid Legal today for an initial consultation to make sure your business is completely sale-ready.
And if you’d like an introduction to an accountant or another adviser with the right experience, just ask. We know plenty of good people and are always happy to connect you.
Ryan has helped a vast number of businesses protect and control their intellectual property as well as drafting and advising on consumer and commercial contracts.
