There are several reasons to sell your business or limited company in Ireland, including retirement, making money, or simply wanting to get out of it.
You can sell your shares to a third-party buyer or to another business. You might also consider transferring your shares if you have a limited company.
You’ll have to work with your fellow shareholders if there is more than one shareholder.
When you’re ready to sell your business, make sure you check the Articles of Association and any shareholders’ agreement, which frequently include provisions for buying and selling shares in your company.
When selling a limited company, you must consider your shares, assets, liabilities, taxes, professional assistance, and the buyer.
You should also consider how you’re going to get the business ready for sale and how long the sales process might be.
Getting your business ready for sale
There are a few things to be aware of before you sell your business in Ireland.
To complete a transaction, the seller may need the approval of all shareholders. The limited company owns the company’s assets and liabilities. When shares in a limited company are sold, the business’s assets and responsibilities are transferred as well.
Pre-emption and the rights of existing shareholders
Pre-emption rights allow existing shareholders to buy shares before they become available to the general public, either as part of a new share offering or through a stock transfer by an existing shareholder.
The shareholders’ pre-emption rights are set forth in the company’s shareholders agreement and/or articles of association, so double-check that you’re not in violation of these when you try to sell a business in Ireland.
Capital gains tax
You may make a ‘capital gain’ when selling your business in Ireland (for example, the money you get from the sale).
The capital gains tax is a charge on the profits earned when you sell (or ‘dispose of’) an asset that has appreciated in value. It’s not the money you get that’s taxed; it’s the rise in profit.
If you owe Capital Gains Tax, you may be able to claim other tax relief benefits such as Entrepreneurs’ Relief.
Selling your assets
Did you know, you can sell the assets of a limited company instead of selling shares?
Your company’s assets, such as equipment, furniture, fixtures, account receivables, inventory, goodwill, and cash could be transferred to the new owner.
The company’s assets may be sold as a going concern. This is when you sell enough of the company’s assets to keep it operating as usual. Customers, suppliers, and staff are all retained by the business.
You will want to value your business by appraising each and every asset.
Selling only part of your business
It’s critical to keep your staff informed if you’re selling part of your company. For example, you may be selling a certain department or function.
You must inform any of your workers who are affected by the sale of a portion of your business about the changes, including:
- When and why the business being sold?
- If applicable, provide information on job loss or relocation benefits.
A sale of a business might be lengthy and complicated, putting extra demands on the management team, especially for first-time sellers, and affecting the underlying business operations.
If you are a sole trader, the process is much more straight-forward.
Liabilities are likely to include accounts payable, salaries, taxes, and loans for your company.
If a limited company is being sold, the firm’s obligations are generally transferred with it to the new owner.
Before acquiring the business, the buyer will want to examine its liabilities and do due diligence.
Companies Registration Office
Don’t forget to update the Companies Registration Office with the company’s statutory registers of members, directors, and “people with significant control.”
You should also submit a final Corporation Tax return before the business is transferred.
If a profit was made during that time, or any profits accrued from the sale of business assets, Corporation Tax may be due. If your business is VAT-registered, the VAT registration may be transferred to the new owner.
Independent legal advice can help you to sell your business
You’ll need to evaluate whether selling the whole company or selling business assets to a buyer is preferable.
Understanding the different sale options when getting your business ready to sell is time-consuming and there are a number of potential risks.
Our commercial lawyers can assist you with preparing for a sale, selling your business and paying tax.
Your buyers’ credit check
Don’t forget to double-check the credit of your purchasers. It’s not smart to sell your business to anybody who simply claims they can afford it.
You must examine the source of funds for your buyer and how long it will take to complete the limited company due-diligence.
Although the value of your company is important, you must also consider the buyer’s approach and in some cases even their character.
There is also the legal paperwork that will have to be prepared to finalise the deal and conclude the transaction.
You’ll also need to decide on how the money will be paid.
Will you request a down payment while the transfer is in progress?
Alternatively, would the cash arrive in installments after completion?
Protecting you and the business
A non-disclosure agreement can help you and the business you are selling to avoid legal problems.
An NDA can help to prevent future use of confidential information in instances where the sale of a business breaks down.
When you’re selling a business, sensitive data is something that may put your company at risk; using a non-disclosure agreement offers several significant benefits, even when you believe the other party will keep secrecy.:
- If your buyer is in the same line of work, they may take the knowledge you provide during sales negotiations to improve their own company if they decide not to go any further.
- If discussions come to a halt later on and you want to terminate the agreement, you can be confident that the other party will be fearful of legal action should they use confidential information.
- If they used your confidential information for commercial gain, or in a way that isn’t specifically outlined in your NDA, you may be able to take legal action against them.
Who buys the business?
Finding a buyer can be one of the most time-consuming phases of the sale process, but it’s critical to getting a successful transaction.
Buyers can be divided into three categories: existing management team, strategic buyers, and financial buyers, each with its own set of characteristics.
Different types of buyer will also come up with a different type of business valuation.
How to value my business
Owners of listed public limited company shares may find it easier to obtain a ready-made market price for their shares, but those wanting to value a private company must be more innovative and demonstrate the value.
How long does it take to sell a business in Ireland?
If your business is “market-ready” it should be much easier to negotiate with interested parties.
The amount of time it takes to sell a business is sometimes determined by luck and how eager the buyer is.
The answer also depends on how well you prepare your business for sale and how patient you are when searching for buyers.
Your business revenue, assets, location, and cash flow play important roles in the process.
Can I sell a part of my limited company in Ireland?
Selling part of your limited company means you shared the responsibility with the new buyer.
If selling part of your company you should make sure you have a shareholders agreement in place so that everyone is clear about their roles and responsibilities.