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Selling the Company
Selling of business can be of following two types i.e.
Selling of Particular Division or undertaking:
In case a particular division or undertaking of the company is not working profitably or the management is no longer interested in carrying the same further, than it can sale that particular division or undertaking without effecting the business as a whole. In such cases, either the undertaking is sold on a running basis or the business is stopped and all plant and machinery related to it is sold off.
While selling any particular division or undertaking, it is necessary to ensure that its separation or discontinuance in any manner will not affect the independent operations of the Company and it is more profitable to sell the business instead of running the same. Moreover, another important factor that is to be considered, while selling the business, is its valuation. The company should get the valuation of business by professional advisors in order to the real worth of the business.
Process to be followed:
- Approval of Board of Directors: The Board of Directors should approve the proposal to sell a particular division or undertaking and call a meeting of shareholders.
- Approval of Shareholders: The Shareholders shall approve the proposal to sell a particular division or undertaking by way of ordinary resolution.
- Valuation of Business: The Board of Directors should hire a professional valuer for getting the valuation of the business.
- Identification of prospective buyers: The Board should appoint investment or merchant banker for finding the buyer and executing the transaction.
Selling the business as whole
Selling the business as whole ongoing concern basis is very important decision and needs to be taken carefully after analyzing all the factors, as it affects various stakeholders related to it. In case of large business houses having employee union or association, it is important to enter into necessary understanding with them, as the decision will create a impact on them and they can create problems in executing the transaction.
Process to be followed :
- Valuation of Business: The Board of Directors should hire a professional valuer for getting the valuation of the business done.
- Identification of prospective buyers: The Board should appoint investment or merchant banker for finding the buyer and executing the transaction.
- Negotiations with the buyers: The Board shall enter into necessary negotiation with the prospective buyer and finalize the sale price and execute necessary agreements.
- Approval of Board of Directors: The Board of Directors should approve the proposal to sell the business on going concern basis and call a meeting of shareholders. Calling of meeting of shareholders is optional
- Transfer of Shareholding: The existing owners should transfer their shareholding to the owners.
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