What to expect ?

Selling the business you have built over a period of time is an emotional experience and unfortunately no one else will share the sense of ownership, emotion or attachment to the business you have created.

Below we have outlined the some of the values and the process you should expect to encounter when setting out on this exciting adventure.

• Respectful negotiation between the parties
• Confidentiality, professionalism and transparency of information
• A fair valuation of the business that both parties agree upon
• Discipline in meeting deadlines

We always advise our sellers to seek independent legal advice

The typical steps involved in a purchase transaction are outlined below, the intricacies of each transaction can differ but the blueprint should be the same.

1. Non-Disclosure Agreement

The first step in any engagement should be to sign a non-disclosure agreement (NDA) giving both parties comfort they can speak confidentially. Sellers need to be open with the acquirer in the first instance about the metrics of their business so together the parties can start to place a value on the business.

2. Engage & Meet

Once the NDA has been signed the Seller will need to provide information regarding their key metrics on the marketplaces where they operate. This enables the buyer to decide if the business is a commercial fit for their organisation.

At this stage the mechanics or equation to value the business are set out. Valuations are based on an SDE multiple and therefore exclude inventory which is purchased separately.

3. Letter of Intent

A letter of intent or LOI can have many names or forms, head of terms, head of agreement etc. The basis of this agreement is a letter type document that is issued by the buyer to seller and sets out the understanding of the terms of the sale that were previously discussed. The LOI will then be converted into a more formal legal document.

LOI will usually have terms that cover the following:

• Who are the buyer and the seller
• The obligations on both parties to complete the sale of the business.
• The agreed upon price or valuation method e.g. a multiple of EBITDA
• The type of transaction to occur, a company or an asset acquisition
• The timeline to complete

The broad concept of an LOI is not legally binding, so you can walk away at any stage however if you have invested time and energy into the transaction this may be difficult.

Beware that an LOI may have legal clauses with regards confidentiality (keeping information private), exclusivity (parties can only negotiate with one another at this time), non-solicitation (protection around one of the parties trying to poach staff) so be mindful of these obligations whilst in the LOI phase of the transaction.

4. Review

The due diligence process (“DD”) is in its very simplest form a prudent review of your business so the buyer can review the operational elements (supplier contracts, advertising, Seller Central Account, reviews) and financial elements of your business (sales, costs, profit, cash). This enables the buyer to determine what the assets, liabilities, risks and opportunities of the business are.

The buyer should have a questionnaire ready for you to fill out, around the operation and nuances of your business and a list of records and documents they want to inspect.

There should also be discussions and follow up questions on the information provided to put context and clarity on items where needed.


Finance Information: Try to have your finances up to date and organised … easier said than done but can always assist.

Content and Context: When sending information ask yourself would you understand the contents without separate context ? If not add context.

Be Transparent: If there are any anomalies (however small such as sudden drop in sales, multiple bad reviews in a specific period, stock outs etc) – it’s worth highlighting these so the acquiring team can note these up, it just saves time.

Discipline: A good due diligence process has deadlines for delivery. This keeps the momentum up to close the transaction.

Records: Keep your own record of information you send across so you can quickly reference if follow up questions come your way.

5. Complete

The legal documentation that transfers ownership of your business to the acquirer are issued. These can take a few forms such as a Share Purchase Agreement or an Asset Purchase Agreement.

Legal Advice: Seek independent legal advice.

Understand: Make sure you understand exactly what it is you are selling. Identify all the steps that need to occur for you to get paid and make sure these are properly documented. If there is language in there that doesn’t make sense … ask ….. and if it still not clear ……… ask again.

Post-sale Obligations: Are there any clauses that oblige you to undertake any tasks post acquisition ? If so be clear in your mind what they are and place a timeframe around these.

6. Funds transfer

Prior to close the sales proceeds are normally held in escrow (a trusted 3rd party secure account) which are then released after all sides have signed the documentation.

There will normally be a small portion of the purchase price paid out after a period of time to ensure the secure transition of the business to the seller, these are often called stabilisation payments. The funds for stabilisation should also be held in escrow.


Seek independent tax advice


Selling your business is an exciting time for you, there are a lot of steps to go through before you sign on the dotted line.

The best course of action is to sit down with the acquirer from the offset and have them set out the process, expectations and timeline in full. Fortia can help you through this whole process ensuring you have a full understanding of the process as it progresses. 

Fortia will work with you to identify the milestones that get you closer to the end goal. Also in case it wasn’t clear from the start seek independent advice from trusted advisors.