Unexpected Liabilities

After the business has changes hands, the seller can still be sued for any unexpected liabilities that arise in the short term. For example, if you sell the business and then straight away, a major customer goes bankrupt (unexpectedly), the buyer is most certainly going to be unhappy believing that you were aware of the possibility.

To compensate, you and the buyer may settle an agreement that states you will pay the difference of any liabilities after a specified limit within a given time. For example, you may agree that any liabilities that unexpectedly arise within, say, the first three years totalling less than, say, £20,000 are the buyers responsibility. If the figure accumulates to more than this total within this time, you are liable to pay the difference.

6f) How much Can I Expect to Receive from the Sale?

When you sell the business, you will never receive the exact amount that you sold it for. Below is a summary of what you can expect to receive (cash) from the sale. This is for guidance only as it will be different for everybody depending on what approach you used to sell your business.

• SELLING PRICE

(Less)

• Cost of Solicitor

• Cost of Accountant

• Cost of Business Broker (can be high as 10% of the final sale price)

• Any accounts payable

• Payment of any outstanding loans, leases, contracts, etc

• Cost of bringing the business up to speed (repairs, refurbishments, etc)

(Plus)

• Prepaid rents, insurance, etc

(Equals)

• SELLERS EXPECTED PROCEEDS

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