Several key terms are crucial when you sell your business. These terms cover everything from the sale price and payment terms to due diligence, seller guarantees, and post-sale duties.
The buyer pays you the sale price to buy your business. Payment terms describe how and when this transaction occurs. You set the agreed terms in a document called a Share Purchase Agreement.
The buyer checks your business’s finances and legal standing to ensure no issues exist. The buyer usually appoints their own Legal Advisors to carry out due diligence and review the documentation. It is common to set up a secure online data room for sharing this documentation.
When you sell a going concern, you must guarantee your business’s finances and overall legal compliance. These safeguards protect buyers from future liabilities. You split these guarantees into various forms of warranties that need review and negotiation; these consist of general warranties and tax warranties. Both parties negotiate the financial limit and the time limit for different types of warranties, which generally never exceed an agreed term. If you identify known issues, you must notify the buyer in a document called a disclosure letter. This letter outlines matters excluded from the warranties, as the buyer is deemed to be aware of those issues.
After the sale, you and the buyer may have duties that affect the transaction, such as paying stamp duty on share transfers, filing with the Company Registration Office, and preparing a set of Completion Accounts that reflect the company’s financial position as of the sale date. You might owe a balancing payment to the seller or need to issue a refund to the buyer.
If you sell products to consumers, you must comply with the Consumer Rights Act 2022. This act outlines your legal obligations, including providing products that are fit for purpose, match the description, and are of satisfactory quality. Consumers have the right to repair, replacement, refund, or price reduction if products do not meet these standards.
You must obtain a company registration licence for your business. Certain industries require additional licences and permits. For instance, food service businesses, those selling alcohol or tobacco, and the gaming sector are highly regulated and require specific licences. You can find out which permits and licences you need for your business and where to apply for them at the Irish Point of Single Contact.
When you consider purchasing a business in Ireland, you should be aware of the tax implications for different legal structures. Consult with a tax advisor to understand and plan for the tax impact of your business sale.
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