Ten New Year's resolutions for business owners looking to sell

As we step into 2025, many business owners will be planning their exit strategies, aiming for a successful and profitable sale, and the right preparations can make a huge difference to ensuring that your business is attractive to potential buyers and that the sale goes smoothly. 

The key to a successful exit is laying the groundwork well in advance, so, below, we explore 10 New Year’s resolutions business owners may wish to adopt in 2025 if they are looking to sell their business within the next few years.

1. Check your company’s Statutory Registers

Your company’s statutory registers are more than just a formality, they represent a critical legal record of title of ownership. A buyer will review these records in incredible detail, and will expect them to be correct and up to date.

Statutory registers include shareholder details, director appointments, but most critically, share capital information, and if your records are incomplete or disorganised, it could delay the sale or raise red flags for buyers. Buyers will want to ensure that they can track ownership of the shares in the same way as if they were purchasing physical property. Correcting the registers can be time-consuming, and so this can be a useful place to start in the new year.

2. Review customer contracts for Change-of-Control Clauses

Customer contracts with change of control provisions can make or break a deal as contracts can be highly valuable assets to a business, and buyers will want to ensure that they will continue after the deal is done.

Many contracts include clauses that allow clients to terminate or renegotiate terms if ownership of the business changes hands, so before you list your business for sale, thoroughly review all contracts to identify any potential risks. If these clauses exist, it may be worth considering renegotiating them with key clients or exploring ways to structure the sale to minimise disruption. Ensuring that your contracts are buyer-friendly will make the sale process smoother and reduce the chances of key clients walking away after the transaction.

3. Grant EMI options to your employees

One of the most effective ways to motivate and retain key employees during the sale process is to offer them equity incentives, such as Enterprise Management Incentive (EMI) options. EMI options not only reward employees but also help align their interests with a successful business and eventual sale, which can maximise the sale price achieved and, dependent on the structure of a sale, ensure that key staff are retained and motivated post completion, for example, where there is an earn out period.

Begin working with an adviser as soon as possible to structure an EMI scheme that fits your goals and the needs of your team, as generally an EMI scheme will need to be put in place before a business is marketed for sale or a buyer is identified.

4. Optimise your financials for due diligence

A buyer’s due diligence will involve a detailed review of your financials, and a clean, transparent set of books can make the difference between a successful sale and a deal falling through. Given that the purchase price will usually be calculated in some way based on a businesses profitability, it may be possible, if reviewed early enough, to make adjustments which can increase profit and, therefore, the purchase price.

Take time to tidy up your financial statements, tax returns, and accounting records. It may be possible to appoint a corporate finance adviser to assist you with this process at an early stage, even if the intention is not to engage them to sell the business immediately.

5. Strengthen and protect your Intellectual Property Portfolio

Your business's intellectual property (IP) such as patents, trademarks, copyrights, and trade secrets, can represent significant value, particularly in industries like tech, media, or consumer goods. A strong IP portfolio can boost your business’s valuation, so it's essential to ensure that your IP is properly protected and documented; specifically, it is important to ensure that it is the business that owns the IP, rather the individuals that created it.

Review your existing IP rights, consider registering new IP that could add value, and ensure all IP agreements are in place. If there are any risks of infringement or unclear ownership, the new year is a good time to address them.

6. Review your employee contracts and documentation

Employee contracts and documentation play a critical role in the sale process. Buyers want to ensure that all employees are properly contracted, that their terms are clearly defined, and that the company is not exposed to unnecessary employment law risks.

In the new year, take time to review and update your employee contracts, handbooks, and any covenant arrangements. Well documented and compliant employment agreements not only protect your business but also help reassure buyers that there won’t be any costly surprises post sale.

7. Assess your tax efficiency

A tax-efficient structure will ensure that you keep as much of the proceeds of sale after completion. Often tax arrangements need time to be carefully planned and implemented, so focus on seeking professional advice as soon as possible in the new year.

8. Reduce owner dependence

If your business is heavily reliant the owner, this can be a major red flag for buyers. To increase the appeal of your company, focus on reducing your personal involvement in day-to-day operations. Try to start the new year by delegating key responsibilities to capable employees, outsourcing tasks that are outside your core competencies, and documenting processes so others can step into your role if necessary. The less your business depends on your presence, the more valuable it may become to a prospective buyer.

9. Review your professional advisers to ensure they meet your requirements for a sale

A successful business sale often involves a team of expert advisers, including transaction lawyers, tax accountants, and corporate finance advisers, who can help guide you through the complex sale process. Next year, take the time to review and evaluate your existing professional advisers to ensure they are well equipped to handle a sale. Your transaction lawyer should have a significant track record of advising clients on the sale of their business, and your tax accountant should be knowledgeable of the relevant tax implications. By ensuring your advisers are aligned with your goals and have relevant experience, you can avoid delays or costly missteps when the sale process begins.

10. Prepare for post-sale transition

The sale of a business often includes a transition period where the current owner stays involved for a short time to help ensure a smooth handover; preparing for this phase now can make the transition much easier. Develop a clear transition plan that outlines your role post-sale, your relationship with employees and customers, and how the buyer can successfully take over the business. A well-prepared transition plan can ease the buyer’s concerns and increase the likelihood of a smooth and successful sale.

Final Thoughts

Selling a business is a big decision that requires careful planning and execution. By adopting these 10 New Year’s resolutions, you can position your business for a profitable and smooth exit in 2025. Whether it's through granting EMI options, optimising financials, or strengthening your IP, each step you take now will help maximise the value of your business and ensure that it’s in top shape for potential buyers.

For further information on how we can support you with preparation for sale, please contact a member of our Corporate team or submit an enquiry form, below.