Thousands of retail shop businesses are bought and sold every year. Even a very small shop business can be quite valuable with someone out there being prepared to spend tens of thousands of pounds on acquiring your business. There are always a multitude of essential legal mattes that need to be sorted out when you are selling a shop business. NA Legal Business Solicitors specialise in sorting out the legal side of selling a business. We represent people selling their retail shop businesses in all parts of the country. Please do not hesitate to make contact with us today if you are involved in selling your business and you need a solicitor.
The Legal Process
You can find out a lot more detail about the process of selling a business in our page on this website called The Sale of Business Process.
There will be a whole lot of issues that need to be sorted out by your solicitor. These will include the sale of business contract; sorting out the transfer of any premises; dealing with enquirers from your buyer's solicitors and making sure that assets, including the business goodwill, are property and legally transferred in a way that leaves you free of any claim for refunds or claims for compensation.
Below are some particular issues that will concern you as someone selling a retail business.
Business Name
The business name may well be a very important part of your business. Small retail shop businesses are often well known locally and the business name may include your own name. Your buyer will therefore probably want to keep the business name and will want a clause in the contract to put this into effect. A lot of the value of your business and the value of its goodwill, could be bound up with the business name.
Goodwill
Most of the purchase price which the buyer agrees to pay for your business is likely to be for "goodwill". Goodwill is the value that your business has as a means of making a profit. Physical assets of the business will include things like equipment and fixtures and fittings. These are physical assets but goodwill is sometimes called "intangible" because it is not a physical asset. Goodwill will include your customer base, the fact that the public like your business and are likely to continue buying from you.
Because goodwill is likely to be the most valuable part of your business, it is likely that the solicitor for the buyer of your business will insist on certain clauses being included in the sale of business contract to protect the goodwill. These clauses are likely to include an obligation on you not to trade in competition with the business once it is sold and not to set up a similar business within a certain number of miles, nor to poach and of the staff.
Website
Depending on the type of retail shop business you have, you might have a website which you obtain business from. Some retail shop businesses get some of their trade through a website. Examples are some clothes shops and very specialist shops such as home brew or custom made jewelers or the like.
You will have to decide how valuable the website and whether you agree to include this in the sale. This will need to be taken account when negotiating the purchase price of your retail shop business.
Stock
As a retail shop business you will be carrying stock. There could be all sorts of issues with stock. For example, is your stock perishable such as for a greengrocer or stock that might be fashion sensitive, such as a clothes retailers.
The usual way to deal with stock in a business sale is for your solicitor to put a clause in the sale of business agreement that stock will be purchased by the buyer at cost price. The stock would then be valued at the time the sale goes through. The valuation could be done by a professional valuer or you and the buyer simply getting together, looking at what their is and agreeing a price for it. The stock would then be paid for in addition to the purchase price for the business overall.
You need to be careful with stock as there can easily be a dispute over it. Sometimes the buyer will claim that stock is damaged, or that it is out off date, gone off or is out of fashion etc. Stock needs to be considered carefully and you should take advice on how best to handle the issue.
Business Premises
Most shops are likely to involve leasehold property which is then transferred to the buyer. This means that the Landlord would have to give formal legal consent to the assignment and all of that side of things would need to be dealt with. Sometimes the freehold of the business premises might be being sold.
Staff
Nearly all retail shops will include employees who are to be transferred as part of the business sale. Shops will often have a mixture of full-time, part-time and casual employees. Often also there are family members involved working for the business. Issues involving employees can therefore be more complex for retail shop sales than for other types of businesses.