Well, it's a new year and for many people a good time to remind themselves of their dreams and aspirations.

One of the most common aspirations is to get out of the rat race and, indeed, if you own your own company you may be considering selling it.

If this is the case for you, you will need to discuss with your accountant the value of your shares and the most beneficial tax position upon their sale. You may then embark upon the legal formalities of a share sale.

The first stage is to consider asking the proposed purchaser to enter into a confidentiality agreement, in which the purchaser agrees not to use the information and to keep it confidential.

This protects the seller should the transaction fail to complete by helping to prevent the purchaser from exploiting confidential information they may obtain about the company.

Where a sale has been agreed in principle, it is not unusual for the purchaser to require the seller to grant him a period of time during which the seller will not enter into negotiations with any other person.

When the main terms of the deal have been agreed, they should be formalised in a set of heads of terms. Although these tend to be non-binding statements, they provide structure to the process and ensure that controversial issues can be raised at an early stage. This is advantageous in terms of time and cost for both parties.

The next stage is usually for the purchaser to carry out an assessment on the financial position of the company by liaising with the company's accountants and to carry out an investigation into the company from a legal point of view.

The parties will then enter into a formal, binding agreement for the sale of the shares.

This will normally include warranties by the seller whereby the seller makes certain statements as to the affairs of the company. These statements form part of the understanding between the parties as to the sale and purchase of the shares and so the seller should ensure all the warranties are accurate.

The warranties are read in conjunction with a disclosure letter containing both general and specific statements, which qualify the warranties.

The seller should ensure that they are formally released from any guarantees which they have given personally for the benefit of the company.

Occasionally a seller is asked to remain in the company after the sale on a consultancy basis. If this is to be the case they should ensure they have in place a consultancy agreement, on agreed terms.

l If you would like advice about selling your company please call Withy King commercial on 01793 536526.