The switch from offline to online sales has proved a success. Business is going well for your online shop, everything is properly arranged, but perhaps you are looking for a new challenge and want to sell your business. How does this work, what is involved, and what do you have to arrange? This article discusses a number of aspects which you must be attentive to when selling your business.
What are you going to sell?
Before you sell your business, have a good long think about what you want to sell and how you plan to do this. If you have a sole proprietorship or general partnership (VOF), the sale (virtually) always involves an assets/liabilities transaction. In that case you sell all the assets and debts of your business. If you have a private company (BV), you can opt for an assets/liabilities transaction or for selling some or all of your shares in the BV.
Determine the value of your business
What is a good selling price? It is not only tangible assets that are worth money (such as the building, fittings and furnishings and stock); the intangible assets are often just as valuable. This could include the value of your brand, your clientèle and the goodwill you have built. There are a number of ways to determine the value of your business. Seek thorough information on this by engaging a specialist.
Finding the right buyer
Start looking for someone to whom you would like to sell the business. Prospective buyers may present themselves on their own initiative, or there may be competitors who are interested. Perhaps you have an employee who would like to take over the business? There are consultancy firms that specialise in brokering business transfers. They can work with you to find the right buyer. Decide for yourself what is important to you in a possible buyer.
Provide information about your company
Potential buyers will need sufficient information about your company. An information memorandum can be drawn up in this context. Before a takeover contract is concluded, the potential buyer usually examines the accounts (due diligence).
Think about your future role
If you have found a buyer, discuss whether you are able and willing to still play a significant role in the future. You have a great deal of knowledge about your business and that can be helpful for the buyer. There are other buyers, however, who would prefer that the seller not be involved. Make clear written agreements on a possible consultancy role so that everyone knows where they stand.
Transfer
Once the due diligence has been concluded to the buyer’s satisfaction and agreement has been reached on the value of the business, it is time to conclude the takeover contract. For a BV, the shares will subsequently have to be transferred by means of a notarial deed. At that moment the BV remains the contract party in current contracts and the intellectual property rights and domain name continue to be held by the BV.
In the event of an assets/liabilities transaction, all assets and debts must be transferred. Specific attention must be devoted to the following topics:
- Current contracts to which your business is party must be taken over by the buyer. The other contract party’s permission is required for the contract to be taken over.
- Your business usually also has a number of intellectual property rights. For instance, you have a trade name that is protected and perhaps you have registered the name of your online shop as a trademark. The trade name is transferred along with the business, in principle (see also this article). A trademark is transferred by means of a written deed between the parties. By registration in the trademark register, the transfer also acquires effect vis-à-vis third parties and the new trademark holder can object to infringements of its trademark.
- Your online shop’s domain name will also have to be transferred. Most hosting services provide a form that can be filled in by the seller and buyer.
- If your business also has social media accounts (LinkedIn, Facebook, etc), these accounts must also be transferred.
Find out how the transfer takes effect for tax purposes
In most cases you will have to pay tax on the (excess) value of the company when you sell your business. This is called cessation profit. If your business is a BV and you transfer the shares, you make a capital gain on a substantial interest, which is taxed in Box 2 on the income tax return. If your business is a sole proprietorship, you make a discontinuation profit, which is taxed progressively in Box 1 on the income tax return. You can find these and other aspects of the fiscal settlement of a business transfer here.
This was the last article in the series on switching from offline to online sales. You can find a complete list of all the articles here. If you have specific questions about switching from offline to online sales, please contact our law firm.