In addition, there are of course many individuals looking to buy either the whole, or a share in a practice – particularly those looking to buy into the practice where they currently work.
Selling can be a stressful experience – but here are some tips to help you get things organised before you start, so that when you sell, you are well prepared which should make the sale a little easier on your blood pressure!
Tip 1 – Be prepared to deal with Due Diligence
‘Due Diligence’ is the process a buyer will go through to check that everything is satisfactory with your practice – or if it is not, that they are aware of the positon.
A buyer’s solicitors will send through 2 questionnaires – one about the practice and another about the property. The solicitors will be acting on the premise that you know everything about the practice and their client does not (even if they happen to be working at the practice at the time). They will want to see what ends up being a large amount of paperwork including accounts, compliance licences and certificates, planning permissions, commercial contracts, leasing agreements, employment contracts and quite a lot more.
Goodman Grant will provide you with a list setting out the type of documents you will be asked to produce so that you can start to collate these well in advance.
Tip 2 – Timescales
Although both buyer and seller may be eager to proceed quickly, it should be remembered that there are what seems like an increasing number of third parties who will be involved. A buyer is likely to need external funding and many lenders have their own solicitors who will raise their own enquiries. If your practice premises are leasehold then the landlord’s permission to transfer the lease, will be required.
Transactions proceed at the pace of the slowest person – everyone else can be doing their bit but if any one of these parties is slow in dealing with matters, then it will hold everyone else up.
Apart from this the legal work needs to be processed carefully to ensure that information which has been provided is accurate and that the business sale agreement is fair to both parties and does not favour the buyer over the seller.
Tip 3 - Property
If you own the freehold and will be paying off any mortgage, then you do not need to do anything else now.
But if you have a lease, then either this will need to be transferred to the buyer or, if the lease has less than 15 years left, then it is likely that a buyer’s funder will require this to be replaced with a lease of at least 15 years (funders generally require a lease to be for at least the same length as the term of a buyers borrowing).
Either way, the permission of the Landlord will be needed so it is wise to speak to your landlord sooner rather than later so they are aware and “onside” before you start. Landlords’ will instruct their own solicitors and it is the convention for a seller to pay a Landlords legal costs for dealing with this.
Tip 4 - Hiring Agreements
If you have any equipment on lease, you may wish to contact the finance company to see how you go about either transferring the arrangements to the buyer (if your buyer is willing to take it on) or paying it off in which case at least you know how much is outstanding and will need to be paid to the finance company on completion.
Tip 5 - Partnerships and Incorporated Practices
Where you have such an arrangement, you should have a written partnership or shareholder agreement in place.
You should check carefully the provisions of these agreements as most contain provisions which mean that your share in the partnership, or shares in the limited company, need to be offered to your other partner, or partners first, before they can be sold on the open market. Even if you are not speaking to co-owner, you must abide by the terms of your agreement and should therefore approach them before putting the practice on the open market or agreeing a sale to a third party.
Tip 6 - Be Open
The Business Sale Agreement will contain several indemnities and many warranties covering pretty much every aspect of the practice and the property.
It probably goes without saying but If you have concealed any information, it is likely you could be sued after the sale for misrepresentation or breach of warranty.
Tip 7 – GET your property ducks in a row
Whether you are selling the freehold, granting a new lease or transferring an existing lease makes no difference – you will still need an Energy Performance Certificate and you will also need an asbestos survey as well. You will also need a fire risk assessment.
In addition, (if the output is more than 12 kilowatts) need an air conditioning report.
Having these organised and available should help to speed matters along – and if any issues are revealed then these can be dealt with before the practice is put on the market, rather than causing delay, expense and stress later on.
Tip 8 - Planning Permission
If you do not have planning consent and building regulation approval for any works that have been carried out to the property, or indeed for its use as a vet practice, do not approach the local authority. These issues can probably be covered by relatively inexpensive one off payment for insurance but this might not be possible if you have alerted the planners.
Tip 9 - Inventory
Time consuming but you are going to have to make a detailed list of all of the equipment that you are including in the sale (and a separate list of anything at the practice which you are taking with you).
Tip 10 Warranties
Back to point 6 above.
You know what you are selling and the buyer does not. His solicitor is likely to want you to warrant that all the information you have provided is true, complete and accurate. The Business sale agreement will include statements from you in support of your comments on the financial side of the business, the equipment, the staff, compliance, and many other aspects of your practice. It is important that your lawyers are experienced in dealing with and negotiating the specific terms of these warranties to minimise the risk to you and there should be extensive “vendor protection” provisions to protect you from claims so far as possible.
There are many other aspects to the sale of a practice - but at least you now have your starter for 10!
For more information, visit vets.goodmangrant.co.uk