Timing

Deciding when you should buy or sell your business is a crucial step as the timing can be key to making a profit or losing money.

Sellers will need to consider the financial state of the business and why they are selling. Is it to move on to a new project, to retire or to grow the existing business? The ‘right’ time is a tricky thing to predict, but you should be thinking about this for years before taking any action so that you are fully prepared when it is time to sell.

Before selling your business you will need to ensure that everything is in order for potential buyers to look at. This means all the books and records, the premises and any staff that need to be prepared. Just like selling a house, the smallest details can make the difference, so if it’s broken, fix it and if it needs refurbishing then do it.

For buyers timing will mostly come down to personal circumstances. If it is the right time for you to take on a business and you have the financial backing to do so, it is unlikely to be hindered by much else.

However, market fluctuations will affect both buyer and seller in businesses that rely on either the real-estate value or popularity of the product. But this will all come into the due diligence aspect later on.

Valuation of The Business

The problem with business valuations is that they are often overvalued by the seller. This could be through a misguided bias or because of wanting a higher return on their investment. The best way to avoid this bias is to have an independent valuation performed by an expert.

Generally speaking, most businesses will be valued by a multiple of profit. However, there are also asset-based valuations and entry valuations, discounted cash flow valuations and rule-of-thumb valuation that includes elements of a few different methods.

So for buyers, it is worth asking the seller which of the methods they used to arrive at the valuation and then perform your own check against the relevant financial records. You will want to be looking to identify anything that has not been accounted for in the valuation, such as disruptive consumer trends.

Do Your Due Diligence

The dictionary definition of due diligence in legal terms is: a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential.

Due diligence usually starts once both parties have agreed on a deal before signing a letter of intent. The period allocated for due diligence to be carried out is usually between 60 and 90 days.

During the period the seller will need to prepare everything that the buyer may request. All documents should be provided promptly and any additional information required should be given swiftly to avoid your buyer backing out. If they feel that you are stalling, they may get nervous and pull the plug.

Make sure that before the buyer has even started the process of due diligence that you have been through all your financial records and that everything is in order with no red flags that could dissuade the buyer from continuing with the purchase.

For the buyer, you are the one carrying out the due diligence, so you want to make sure you have all the relevant paperwork. You will want the financial accounts, surveys of the buildings, equipment and stock records. It is not so easy to ascertain what goodwill and brand reputation the business has built up already, but you still need to try to assess this. You may also need to look at the staff of the business as they are an asset too.

Finances

There will always be a deal of ‘haggling’ when it comes to buying a business. Both sides need to have a clear idea of what they want out of the deal and be prepared to walk away if it doesn’t suit them. There is no point in over-stretching your limits before even embarking on your new business venture. You may need to compromise and a certain amount of flexibility may be required to make the deal happen.

As the seller, you would probably wish to receive the full asking price up front. However, you could likely find yourself accepting a portion of the sale price in instalments. These instalments are called ‘earn-outs’ or ‘seller finance’ and maybe the only way to encourage the buyer to increase their offer to what you are willing to accept. You may also find yourself staying on as a consultant for a set period after the sale.

For the buyer, your financial resources and a risk assessment will help you to look at your funding options. It is advisable to seek professional advice on this. You may wish to ask the seller to stay on in a consultancy capacity for a short period. Usually, if they currently play a fundamental role in the day to day operations of the business or you lack experience in running this particular type of enterprise.

If you are offered seller finance, this is a good sign that the seller believes that the business will do well in your hands. They aren’t likely to agree if not as you could default on payments.

Hire Professional Advisors

It is unlikely that you will be able to afford the time and dedication it takes to go through all the legal processes of buying or selling a business.

Sellers need to ensure that they have all the relevant records and can answer all queries raised during the due diligence process. But you will also need to keep the business running throughout the process. It is easy to miss things if you don’t have the back up of professional advisors.

For the buyer, the professional advisor will help you to navigate your way through the necessary paperwork and assist you with negotiations. This can be a very emotional time for both buyer and seller, so putting it in the hands of professionals takes the pressure off.

If you would like to speak to one of our professional advisors about buying or selling a small business, please get in contact with one of our friendly staff today.

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When buying commercial property there is a lot to consider and you should always do your due diligence before making a purchase. Seek professional advice and take the appropriate steps to ensure you are protecting your investment.

Below we will go through a brief guide to buying a commercial property with what to be aware of before making the purchase.

Know What You Want

This may sound obvious, but you need to know what you want to use the building for that you are purchasing. Certain buildings will suit certain needs, but more than that, some buildings will have restrictions on what they can be used for. So having a clear plan of what you are going to do with the property before buying is essential. Far too many investors see a ‘bargain’ and buy then try to figure out what to do with it which often leads to money being lost.

Does This Commercial Property Suit Your Needs?

Having established that you should have a clear idea about what you want to do with the property, there are some factors to consider when setting up for business.

• Will you need to expand at any point, if so, does this property allow for that?
• Does this property allow you to conduct the business you want to?
• Are there good transport links?
• Is there parking?
• Is there a proven track record for this area in your chosen business?
• Can you sublet?
• Do you need walk-by traffic? Does this area have that?
• Does this property provide the flexibility you require?

Stick to Your Budget

You need to set realistic budgets in place and stick to them. There can be a lot of hidden costs that cause miscalculation and mean you end up having to borrow more than anticipated. Make sure you include all fees, such as Stamp Land Duty Tax and professional fees. Allow for refurbishments and construction costs in your budget and maintenance and operational costs. Don’t forget the services such as waste management and your mortgage costs.

The other side of the budget is your expected ROI (Return On Investment). A minimum of 10% is a good starting point, if the estimate is below this, you may wish to reconsider.

Professional Advice

It is advisable to get a full property structural survey done to avoid any nasty surprises. Visit the property before you buy and make sure you have all the paperwork to back up the purchase. Always seek professional legal advice before signing anything and enlist the relevant professionals to carry out surveys etc. Above all, be patient and take the time to ensure you have the deal that works for you.

If you would like to talk to one of our commercial property experts, please contact our offices and arrange an appointment today.

Selling Commercial Property

When selling a commercial property there is a lot to prepare prior to the sale. We would advise seeking professional advice right at the beginning of the process to ensure that you have all the documentation in place that you need.

Communication

It is important to keep lines of communication open with your buyer at all times. While communicating with them you will draw up the Heads of Terms and provide all necessary details such as the EPC and asbestos survey results.

The agreed Heads of Terms will be sent to your solicitor who will then obtain your title documents from the Land Registry office. Your solicitor is the one who will arrange the exchange of contracts and confirm all financial transfers. They are also there to answer any questions you may have during the sale process.

Wait for your buyer’s solicitor to communicate with your solicitor and send the contract package. The buyer’s solicitor may ask questions with relation to Commercial Property Standard Enquiries (CPSEs). The buyer’s solicitor should also be the one to carry out any due diligence. Due diligence may take several weeks and more questions may require answering during this period.

Contracts to Completion

Once due diligence has been completed, all documentation will need to be agreed and signed, including the transfer deed and the terms of sale contract.

The buyer will need to put down a 10% deposit to secure the exchange of the commercial property proceeds. Upon exchange, a completion date is set and this is a legally binding contract.

Once completion has taken place your mortgage will be discharged and you hand ownership and keys of the property over to the buyer.

Necessary Information About Your Property

You will need to prepare your premises to ensure they are being left in good working order. You will also need to provide details about your property for potential commercial real estate buyers. The paperwork includes commercial planning use classes, for example, Class A – Shops (including some services).

A Commercial Energy Performance Certificate, EPC will also be required. You’ll need to provide business rate details and any other costs that the buyer will be responsible for. Any important health and safety information such as the presence of asbestos will also need to be disclosed.

The CPSEs will also be sent by the buyer and you will be expected to know all the necessary information on this about your commercial property. Your solicitor can help you with this form.

How you are going to sell your property is another consideration as there are a few different avenues such as auction or through a commercial property agent. Whichever you choose, you will need to seek professional help throughout the process.

If you are looking to sell your commercial property and would like assistance from a professionally qualified solicitor, then please contact our offices today to speak to one of our advisors.

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Integra Solicitors sponsored the Manchester Gregorians AFC‘s annual golf tournament hosted by Northenden Golf Club on Friday 26th July 2019. It was a fun filled day of golf and thanks to all who attended and helped to raise money for the club.

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The boxing itself was preceded by a three-course meal, after which there was an auction led by the lively host for the night, multi award winning TV and radio presenter Connor Phillips. The auction prizes of a framed and signed Manchester City T-Shirt, glass cased and signed Tyson Fury boxing glove, meal for two worth £100.00 at Ribeye Steakhouse with a Rolls Royce Chauffeur pick up and drop off, and the last two tickets for the India v Pakistan cricket match understandably caused a lot of excitement in the room that night, with multiple bids in the £1000’s flying round the room! All proceeds from the donations and auctions went to Longsight Boxing Club, a registered charity and local initiative with ground-breaking visions and ambition to improve life opportunities through structured mentoring programmes, crime prevention education with a particular focus on knife crime and anti-social behaviour, community mental health and wellbeing development and the promotion of sports and fitness in the local community to tackle obesity, build self esteem and teach the importance of self-discipline and dedication.

Just before the boxing began, there was a touching minute of applause led by the classmates and friends of Yousef Makki, showing a true testament to his character and the effect his death has had on the community. This was followed by celebrity endorsements from the likes of former unified light-welterweight world champion Amir Khan, which echoed their support for the boxing club and condolences to Yousef’s family and friends for their tragic loss.

The boxing then started, with six fights of three rounds. There were local amateur boxers of varying weights including a Welsh National Heavyweight Champion, Reuben Wall, fighting against boxers from clubs across the country who had come down to Manchester to show their support for both the sport and the Boxing Club. Longsight Boxing Club won a total of five out of the six bouts. It was clear from the young boxers of Longsight in attendance that night just how well the clubs teaching has worked so far, as there was nothing but utmost respect in the ring in each and every match. The fights enabled us to see the hard work and dedication put in by the head coach, Omar Al-Wandawi, the rest of the coaches, and of course the fighters who put on a spectacular performance, making the night one to remember.

By Kathryn McGeoghegan

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Located within the heart of Stockport town centre in Greater Manchester, X-Gen VR will provide customers with an immersive and escapist virtual reality escapade by giving customers a chance to experience arcade-style games such as motorbikes, go-karts and archery in a virtual reality environment.

In addition to the lease renewals of the current and longstanding commercial tenants, this is exciting news for Stockport as well as corporate and commercial business within the surrounding Greater Manchester area who will also benefit enormously for the Merseyway Shopping Centre’s new tenancy with X-Gen VR.

If you are a corporate or commercial business and are considering taking a lease or have enquiries on any landlord or tenant issues then feel free to contact us on 0161 870 6629 and a member of our highly trained and skilled legal property team would be more than happy to assist in answering and resolving your queries.

By Adam Moseley

The post From Virtual Reality to Reality: X-Gen VR Coming to Stockport’s Merseyway Shopping Centre appeared first on Integra Solicitors.

Impact of money laundering

The Home Office Media Economic Crime Factsheet dated 2017 states that the scale of money laundering impacting the UK is likely in the region of £90 billion a year.

Money laundering is not only a crime within itself, it is also a facilitator for other serious crimes such as drugs trafficking, fraud, terrorism, robbery, bribery and corruption.

The consequences of involvement in money laundering activities are severe, even if the professional or their respective firm are not aware of the illegal activities surrounding money that they are dealing with in a transaction. The repercussions include but are not limited to losing your license, paying a fine or even facing criminal prosecution.

A key Principal under the SRA Code of Conduct 2019 is ‘integrity’, this is paramount to your role as an administrator of justice and maintaining the trust of the public. One of the most valuable assets to a legal service institution is the reputation of integrity. Money laundering can have devastating consequences on a professional or a law firm’s integrity, once an allegation of money laundering is found to be true, it is very difficult to re-establish the key principal of integrity.

If you are suspicious, act now!

You are legally obliged under the Money Laundering Regulations 2017 to submit a Suspicious Activity Report (SAR) to the National Crime Agency, if you suspect a money laundering activity is taking place. A thorough SAR can alert law enforcement to potential instances of money laundering by providing information and intelligence that can assist in providing crucial intelligence for law enforcement. Investigations are often based on multiple SARs and your report could be key.

If you need any help with this or any aspect of commercial law, get in touch now.

By Zara Mahmood

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If your startup business has two or more shareholders, you should consider setting up a formal shareholders’ agreement. Agreeing on how you will handle fundamental issues could save a lot of anguish later on.

What is a shareholders’ agreement?

A shareholders’ agreement is an arrangement between a company’s shareholders that describes how the business will be operated and outlines each shareholder’s rights and obligations. It is different from the statutory requirement to have articles of association.

The shareholders’ agreement ensures each shareholder is treated fairly. Some observers compare it to a prenup agreement agreed ahead of marriage. It will deal with how disputes are resolved and agree on exit plans for each party and what they may be entitled to.

Establishing an agreement at the outset is important

It is important that the agreement is established at the very outset. This ensures the arrangements you have with your shareholders are clearly set out to minimise the risk of dispute. You can’t always foresee the issues that will arise in the future, so it makes sense for all concerned to establish the agreement on day one.

A shareholders’ agreement ensures there is certainty and clarity about how the company is run and confirms that responsibilities are clearly outlined and understood. It will reduce the potential for conflict during the early stages of establishing the company and then later down the line. Ultimately it will ensure the business runs smoothly.

A shareholders’ agreement can mitigate the risk of minority shareholders having relatively little say in the running of the business or can intentionally protect the interests of majority shareholders. It can also establish how much power and control directors have, and when and how they should consult with shareholders.

Decision limbo or deadlock

Some disagreements will lead to a position where shareholders cannot agree on the best way forward. If there is no majority to determine which direction to take, the business can become locked in limbo. This is common when a number of shareholders hold the same percentage share and become deadlocked. A shareholders’ agreement will help avoid this scenario.

Exiting the business

At some point, one or more shareholders are likely to want to leave the business and you might think this will be easy to manage. But often, it isn’t. At this point, there are a huge number of things to consider – and without an agreement concluding what happens next, it can be very difficult.

What happens if the shares are now very expensive and the other shareholders can’t afford to buy them? What happens if the exiting shareholder wants to set up in direct competition? What happens if the exiting shareholder sells their shares to someone you don’t want involved in your company or that person inherits them as a beneficiary?

Furthermore, without a shareholders’ agreement, it can be almost impossible to remove a shareholder from the company, even with recourse to a costly court case.

Catastrophic disputes

Most people who go into business with each other do so for a good reason, and mostly because there exists an element of trust and some mutual goals.

But as businesses grow, views and circumstances can change, and differences arise. If there is no clarity on what happens next, this can be the end of the business.

Disputes in companies can and do destroy businesses, careers, reputations and relationships. The enormous time, energy and fees required to resolve some differences can be catastrophic. A shareholders’ agreement costs relatively little and could just save the day.

We have put together a shareholders Agreement checklist for you! – Click here to download

If you’re looking for advice on shareholders’ agreements, contact the team at Integra Solicitors today.

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If you are looking to rent a commercial property for your business, there are a number of factors that you should consider before signing a lease. It is advisable to take expert advice to ensure you are getting the best deal, particularly if you are looking for a long-term lease.

1. Length of the lease

Leases for commercial property rental are different to those of residential rentals. They can range in length, anything between one and fifteen years is not uncommon. If you go for a longer-term lease, you should make sure that there is a break clause – usually after the first five years – to protect you in case the situation of your business should change. You should always try to negotiate your break clause; if you would like a get-out clause of fewer than five years, you may be able to work this into the lease.

2.Getting the right price

Most people are not as familiar with the rental prices of commercial property as they are with residential property, so you should do your homework thoroughly before making an offer. Look up local property rental and purchase prices in your area, so that you are in the best position to negotiate once you have found one you want to go for. For longer commercial rents, most landlords will ask that you put down three months’ rent upfront – this is normal practice, but you should ask if you can pay the rent monthly going forward.

Another thing to check is whether your rent is liable for VAT and if this is refundable. This can make a big difference to your overall cost, so make sure you are clear about VAT rules before you make an offer on a property. As with residential properties, the price that is advertised may not need to be the price you pay. Research commercial rental demand in your area. If demand is low, you may have more freedom to negotiate a lower price.

3. Additional charges

When you rent a commercial property, there are a number of extra charges that you should expect to pay, including the cost of yearly insurance for the building and its contents, property taxes for leases and possibly upfront charges for utilities like electricity and water. Many serviced properties also have service or maintenance charges that you will be expected to pay, which cover upkeep such as cleaning, repairs and gardening.

4.Inspecting the property

You should also thoroughly inspect the property before signing the lease, as you may be able to negotiate repairs or upgrades as a condition of your lease. It is advisable to hire a surveyor to inspect the property before proceeding with its rental, as they will be able to tell you whether the property matches up to the proposed price.

Seeking legal advice

When negotiating the terms of your lease, it may be beneficial to seek advice from a legal consultancy that has particular experience in dealing with commercial rentals. As your contact will be legally binding once you have signed it, it is important that you understand everything that is in it. As a landlord or a tenant, you will need a solicitor to review the contract before it is signed, in order to protect your interests. If there is anything in your contract that you are unsure of, your solicitor will also be able to negotiate changes on your behalf.

Here at Integra Solicitors, we are experts in working within the commercial property sector. We can advise you on the complexities of arranging a commercial lease to ensure that you secure the best terms and to protect your interests. Give us a call today to get your case started.

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The Government had previously set out its intention to reform, “whiplash claims” on 1 April 2019 by pushing the small claims limit to £5,000 from £1,000.

If the proposed reforms go ahead as currently drawn, Claimants who have suffered soft tissue injuries as a result of a road traffic accident which does not attract an award of damages of £5,000 or more will not be able to recover their legal costs for pursuing a claim. In addition, “whiplash claims” with a duration of up to two years would be subject to a tariff of fixed compensation.

Many Claimants will be deterred from pursuing a claim without legal guidance in an area of law within which that they have no knowledge or expertise.  Those Claimants which attempt to pursue a personal injury claim will be vulnerable “Litigants in person” at the mercy of bullish Defendant insurers who will have the upper hand in negotiating with lay Claimants thus resulting in significant under settlements and soaring profits for the insurer.

Accordingly, the only beneficiaries of the proposed reforms look to be big corporate insurers instead of innocent victims of negligent driving.

Even though the proposed reforms have been pushed back, the inevitability of the reforms is highly likely which begs the question, should Claimants be jumping for joy?

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