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Gloucestershire Business News

Selling a business on retirement - Diana Eames of Davies & Partners

By Diana Eames, associate solicitor at Davies & Partners 

The last 18 months has seen the closure of many businesses. For some, the financial hardship forced upon them has been too much, and they have had to take the difficult decision to cut their losses.

But for others, it has provided a chance to stand back, re-evaluate where they are, redress their work/ life balance and make the most of the opportunity to try a change of direction.

Here, Diana Eames, associate solicitor at Davies & Partners in Gloucester, talks about the key factors involved in selling a business on retirement.

Many businesses for sale come with a backstory of struggle and loss during the pandemic, but for potential buyers this could be an opportunity to grasp the dream and start out in a sector they had thought beyond their reach.

So, what should these buyers/ sellers be thinking about as they evaluate the opportunities available to them?

  • What form of transaction are they looking for - to buy the shares of a company or just the assets?
  • How much are they prepared to pay/ receive?
  • How is the purchase price going to be financed?
  • Is there already a willing buyer on the side lines - an existing staff member might welcome the opportunity to take over or there might be a competitor who has always had their eye on the business?
  • What will happen to any premises?
  • What about the employees?

The key to a successful transaction is always going to be good communication. Both parties need to have a clear idea of what they are setting out to achieve, but each also needs to recognise what truly matters to them.

Some compromise is inevitable but matters which would be a deal-breaker need to be identified. Discuss objectives upfront and try to arrive at a realistic plan of action.

Before committing to a purchase, a buyer is going to want to carry out a detailed investigation of the business. This could involve full commercial, financial, and legal due diligence. A seller would be well advised to ask the buyer to sign a non-disclosure agreement before being provided with any of this information, in order to protect the business should the transaction not go ahead.

If the buyer is satisfied that they want to proceed, they need to make sure that they can finance it. If this is through a bank or private borrowing, any third party might have their own requirements before releasing the funds, so those need to be ascertained early on.

Similarly, since few businesses are taken on subject to existing finance arrangements, any seller who has borrowing in place will need to know what their lender requires to satisfy current arrangements, and what the buyer requires as evidence of such satisfaction.

A seller is going to want the full purchase price to be paid in cash on completion, but this isn't always possible for a buyer. Any deferred element of consideration is risky for the seller and a continuing liability for the buyer. Whilst some post-completion adjustment is not unusual, a cash purchase is less complicated and enables both parties to start afresh.

The buyer will require the seller to give warranties concerning all aspects of the business. These are effectively a list of promises concerning the business and the buyer will be entitled to sue the seller of any of them are breached. Sellers would be advised to carry out an internal audit in advance to identify and remedy any potential issues.

Does the buyer want to make use of the seller's experience and connections to ensure a smooth handover following completion? Or will the seller walk away immediately, with a list of restrictions preventing them from setting up in competition or trying to steal staff, customers, or suppliers?

Great care should be taken concerning employees. If the transaction involves the purchase of the shares in a company, then the employees' status is unaffected by the transaction. However, if the transaction involves the purchase of the assets of a business, then it is likely that TUPE will be triggered and the employees will transfer to the buyer on the same terms, maintaining their continuity of employment.

Transactions of this nature can be time-consuming and complicated, but they can also mark a new beginning. The specialist team at Davies & Partners aims to guide you through the process as smoothly and efficiently as possible, helping you to achieve your goals.

Contact Davies & Partners on 01452 612345, email or go to

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