Do you know what you are selling?

Assuming that it is a limited company, there are two ways of selling your letting agency. The first is to sell your agency in its entirety by selling the shares in the business.

In a share purchase the new owner inherits everything related to your agency. This includes all of the assets and liabilities, the order book, meaning the obligations to manage properties on behalf of landlords, the website, the phone number, any social media accounts, the bank accounts, the office lease responsibilities, any tenancy disputes and any legal disputes, current or future, even those related to events before you sell.

The new owner takes on all of these assets as well as the risks. Because of this, a share purchase will likely involve extensive legal, financial and commercial due diligence. There would also likely be warranties and clawbacks in case any undisclosed information makes the business less valuable. The due diligence process and the legalities involved in drawing up comprehensive contracts mean that share purchases can take many months to complete, and run up large accounting and legal bills.

A share purchase will likely involve extensive legal, financial and commercial due diligence.

The alternative

The alternative to a share purchase is an asset purchase. If you are running your agency on a self-employed basis, then you will only be able to sell on the basis of assets.

In an asset purchase you choose what you want to sell from the letting agency. You might choose to sell only the contracts to manage the property portfolio, but it could also include other assets such as the office lease and equipment, the database of contacts, the website and the trading name. It is for you to decide which assets you want to sell, or to negotiate this with the buyer.

Asset purchases are much quicker. In fact they can be concluded very quickly if necessary, in a matter of days or weeks.

Decide early on what type of sale you want to conduct. If it is an asset sale, then you should have a good idea which assets you want, or are willing, to sell. Buyers may have their own ideas about what should be included, so be prepared to negotiate.