If you are thinking of selling your business you may want to advertise it yourself in a newspaper or specialist commercial property paper or you may be considering using an agent.
Selecting an Agent:
As with any service you are considering purchasing we would offer the following advice –
Try to get recommendations from people who have recently sold premises.
Check out any firms you are thinking of employing using the resources available to you (your trade association, the FSB, internet forums, etc).
Use your common sense – offers of free valuations / free surveys / market appraisals etc will result in a sales rep visiting and talking to you about signing up with them to market your premises.
As with any other business dealings, get several valuations and make sure you are realistic about the state of the market and the appeal of your business. Do not automatically sign up with the agent that suggests the highest selling price can be achieved without giving this careful thought.
Check what exactly the agent will do to market the property – do they just put it on a website with minimal details available to potential buyers or do they produce detailed property particulars with all the information you would want to see if YOU were looking to buy a property? What about measurements, photos, floor plans? How is their website promoted? Did you know about it before they contacted you?
Check out how good the agent is at promoting premises for sale – Using your local knowledge find a property in your area with the Agent’s board up, or ask your contacts. Check with the seller to see if they have had any interest via the Agent.
Imagine you are a potential buyer for that TYPE of business and do a general search on the internet (eg, look for that type of business for sale in the town you are in). After you do a general search go onto the agent’s website and search there. Did either search actually reveal the property particulars for the business you know they are supposed to be marketing? If you had any problems finding the premises (and bearing in mind that you KNEW that it was on the market), do you think other people will find yours?
If you do your research and select a few agents to speak to make sure you find out BEFORE you sign exactly what their terms are. Do not take a sales rep’s word for it, they know what you want to hear and may be tempted to say things they cannot deliver. If there is any dispute the written terms will usually out-weigh anything the rep may have said.
Before you sign up:
It is vital to remember that as a business you do not have a right to cancel a contract (unlike consumers, who, in some instances, have a ‘cooling off period’). However, a court could decide that if you sign a contract as an individual, you are a consumer, Once you agree to the contract you are bound by the terms (except in very limited circumstances and only if you take a case to Court and they decide otherwise), so read the terms thoroughly and make sure you understand the full implications before signing. In particular check the terms to see if they clarify the matters below:
Does the contract indicate what service the agent will provide?
Do the terms look straight forward or are they overly complicated?
Does the contract confirm that the Agent has valued the premises (if not, why not?)?
What fees do you have to pay upfront?
How long will you be locked into the contract with no chance of ending it?
When and in what circumstances can you end the agreement?
If do not want the agent to deem that the contract continues after the initial set period you MUST write to the Agent to confirm termination, send the letter recorded delivery and keep copy. Keep a copy of the tracking confirmation. Otherwise they WILL chase you for money if the business is sold (as the agent may argue that they will still have sole selling rights while this continuing contract is in place).
When and in what circumstances can the Agent terminate the agreement? [Does the Agent say hecan terminate the agreement for any reason whatsoever? Does he then expect you to pay a fee whether or not he has upheld his side of the agreement?
What fees do you have to pay if you or the Agent end the agreement? [If the agent suggests that you agree to a higher termination fee ask yourself why].
What happens if you find a buyer yourself, do you have to pay the Agent’s fee? If the contract says the Agent has sole selling rights then you will still have to pay them even if they did not introduce you to the buyer.
Is there a term relating to the need for you to obtain an Energy Performance Certificate (EPC) for the premises? You must have commissioned an EPC (ordered it from an approved Energy Assessor)before any PREMISES can be marketed and you have 7 days to get it. You do have a further 21 days following that to obtain the certificate but after that time is up the Agent will not be able to market the property if there is no EPC. If they cannot market the property they are going to want to end the agreement and may seek to charge you fees]
Are the written terms printed on both sides of the agreement? Have you read and understood them all, and are you happy with them? Do not agree to them unless you are sure.
If you have any concerns do not be persuaded to sign anything – ask for a copy of the terms (get the rep to write ‘sample’ across all copies of them) – and study them at your leisure. There is no need to sign up on the day and if you are being distracted or feel rushed stop and ask yourself why you are being put in this position.
It is not uncommon for small businesses so say that they were reluctant to sign up on the day but found themselves committing to the contract anyway and later regretted it. If you have nagging doubts there really is no need to commit on the day, make some further checks and take time to think about it properly.
Payment:
If you pay by credit card you may have more protection should things go wrong. Section 75 of the Consumer Credit Act 1974 makes the credit card company jointly liable for any breach of contract or misrepresentation if the goods or services cost more than £100 and you are an unincorporated business (a sole trader or partnership).
Energy Performance Certificates
Before you put your business premises on the market you MUST commission (order) an Energy Performance Certificate (an EPC) from an Approved Energy Assessor. You can find more details about this on the DCLG website at www.communities.gov.uk/planningandbuilding/sustainability/energyperformance/ndepcs/
You must make available the valid EPC to anyone requesting written details and to anyone who wishes to view the property. There are very limited circumstances when you do not have to do this – for more details please see www.businesslink.gov.uk/bdotg/action/layer?topicId=1082081368
Unlikely though it is, if you get an offer from someone who has not viewed, you must make the EPC available to them at that time (if that is the earliest opportunity for you to provide it).
At the time of sale you must provide the purchaser with the valid EPC.
Trading Standards North West Property Work Group
