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Selling the LLP
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 LLP is not working profitably or the partners are 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 LLP 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. A LLP should get the valuation of business by professional advisors in order to the real worth of the business.
Process to be followed:
- Approval of Partners: The proposal to sell a particular division or undertaking shall be approved by such number of partners, as prescribed in the LLP Agreement.
- Valuation of Business: The Managing Partners shall hire a professional valuer for getting the valuation of the business.
- Identification of prospective buyers: In case of business of large size, it is not easy to find a suitable buyer and therefore it is necessary to avail the services of investment or merchant banker for finding the buyer and executing the transaction.
- Closing of transaction: The Partners along with investment or merchant banker shall enter into necessary negotiation with buyer for determination of sale price and other terms and conditions of the sale. After finalization of sale price and other terms and conditions, necessary agreement for sale of business shall be entered into.
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:
- Approval of Partners: The proposal to sell the business shall be approved by such number of partners, as prescribed in the LLP Agreement.
- Valuation of Business: The Managing Partners should hire a professional valuer for getting the valuation of the business done.
- Identification of prospective buyers: In case of business of large size, it is not easy to find a suitable buyer and therefore it is necessary to avail the services of investment or merchant banker for finding the buyer and executing the transaction.
- Closing of transaction: The Partners along with investment or merchant banker shall enter into necessary negotiation with buyer for determination of sale price and other terms and conditions of the sale. After finalization of sale price and other terms and conditions, necessary agreement for sale of business shall be entered into.
- Admission of new Partners: The existing partners shall cease to be the partners of the LLP and new partners shall be appointed in their place.
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