Time To Focus On Your Business?
Despite the current economic gloom the sale, purchase and refinance of businesses are still being handled regularly at Foot Anstey. However as you would expect, buyers and lenders are looking at businesses with a much more cautious eye in the current climate.
So, if you are looking to:
- sell your business
- obtain investment from new shareholders or partners
- extend borrowings to ease cash flow in the short term
- change your current banking arrangements
then it is crucial that your business is in the best shape possible.
With an increasing number of businesses failing, it is important to protect your business from volatile suppliers or customers as far as possible.
In previous articles we have emphasised the importance of reviewing your standard terms of business and major contracts to ensure terms stipulate that ownership of the goods supplied will remain yours until payment is received. This means in some cases, if a customer folds you may be able to reclaim the goods and resell them where possible.
You may want to ask for personal guarantees from individual directors, if for example you are dealing with a newly formed company, a company unfamiliar to you or an existing customer with outstanding invoices.
On major contracts or high value transactions, it may be possible to take security over certain assets of the business. In many cases this may not be feasible but it is certainly worth exploring in high risk cases.
Logos, brand names, products, software or engineering processes can be valuable assets, there are ways to protect these from competitors seeking to trade off your reputation.
Consider whether a suitable agreement between business owners is in place such as shareholders agreements or partnership agreements. These should cover among other things, key decision making, resolving deadlock, what happens where another shareholder or partner wants to sell and provisions enabling you to force a sale in certain circumstances.
I suspect many of our New Year’s resolutions revolve around personal fitness. However, we should not underestimate the importance of focusing on whether our businesses are fit for purpose.
Whatever the reason, now is the time to ensure your business is in good shape both legally and financially to reduce the risk of falling off the treadmill.
Contact Antonia Power, solicitor for further information or advice.
Published 29/01/2009. The author of this article is Antonia Power
