As 2015 dawns, if you are thinking of selling your business this year, what are some of the things you need to know? What are the issues that we are currently seeing affecting transactions and how do you avoid those issues?

The following is a summary of real challenges that have arisen in disposals which we have been involved in recently, and that we believe will continue to affect deals this year. One common thread running through each example is that by taking some steps now, these issues can be avoided:

Holiday Pay

Deal-related issues associated with holiday pay have only arisen since November 2014. A court ruling said that when calculating holiday pay, an employer needs to consider remuneration beyond salary, including overtime payments. In some cases, the potential exposure to claims by employees for underpayment can be very considerable. It can also be quite difficult and time consuming to calculate the actual exposure. For that reason, purchasers, particularly private equity backed buyers, are insisting on wide-ranging indemnities from sellers to cover this risk. Importantly though, taking some steps to ensure employees are receiving their correct pay in the three-month period prior to a sale can avoid the risk, cost and hassle this issue can cause both buyer and seller.

Customer concentration

Purchasers are very nervous if your business is heavily reliant on a small group of customers. The risk is obvious for the buyer: lack of diversity means greater risk. In some cases, we have seen the buyer walk away from the deal. In many cases, buyers are looking to make part of the price conditional on your business maintaining the customer relationship for a period of time after the sale. This clearly places a lot of risk on you as the seller: you may have no - or only limited - control over the relationship with the customer after completion, and even if you have some control, factors beyond your control could adversely affect the relationship, and therefore the price, you get. By taking steps to diversify your customer base now, you can help avoid these risks.

Forecast accuracy

If you want to avoid the purchaser chipping away at the price as the deal progresses, make sure you can back up the forecasts that you are providing. Once the buyer's team start doing their financial due diligence, if you can't back up forecasts that have been considered when the price was agreed, you face the real risk of the buyer either walking away or looking to reduce the price.

Seller involvement

Like over-reliance on a small customer base, if your business is too reliant on you, you might struggle to find a buyer. Buyers will want to know that, if you cease to be involved in the business, there is someone around who has the knowledge of the business and the relationship with the customers to ensure the goodwill and trade does not walk out the door with you. It is a common situation that a business grows significantly because of the time and effort spent by the owners of that business but failing to delegate or put in place appropriate tiers of management below you, can severely restrict your ability to sell your business.

Immigration compliance

Do you have copies of passports of all of your employees, or can show you have complied with all the checks that you need to do to ensure you are employing only those who are lawfully in the UK? In many cases, we are seeing buyers insisting on indemnities from sellers to cover this risk where they can't confirm that they have undertaken all the appropriate checks. By taking steps now to ingather this information, you can help give the buyer a good impression (that you are a well organised business) and avoid a lot of time and hassle when you are going to be busy trying to run the business and also deal with the sale of that business.

Data Protection

Have you registered under the Data Protection Act? Do you know the key data protection principles and comply with them? Again, we are seeing many buyers insisting on indemnities from sellers where they are unable to show that they have complied with this legislation.

All of the above are real examples taken from deals in which we have recently been involved (or are currently involved). If 2015 is the year you plan to sell your business, make sure these are not hurdles that will be in your way.