As we move into year-end, you might be refining your existing business plan or realising it’s time to put a solid plan in place. Now is a great time to step back and evaluate. Here we explore key corporate legal considerations that should feature in your planning, from contract reviews to preparing for year-end transactions, and how legal strategy can shape and strengthen your Q4 game plan.
1. Contract Risk Management
Your contracts are the foundation of your business relationships. Now is the time to:
- Review and update key supplier and customer agreements.
- Identify contracts due for renewal, renegotiation or termination before year-end. Consider renegotiating customer or supplier contracts if inflation, increased costs or delays have affected profitability.
- Ensure your terms and conditions are current and enforceable. Review how they are being implemented in practice. For example, consider how they are presented to clients or suppliers, and whether they are properly acknowledged and agreed.
- Check contracts for any ongoing obligations or upcoming deadlines and ensure they’re being properly tracked to avoid unintended breaches.
A proactive contract review now could help avoid costly disputes, reduce risk and strengthen your negotiation position for the new year.
2. Year-End Transactions
Q3 and Q4 in 2024 saw a surge in disposals and acquisitions, and this trend looks set to continue. These may be planned exits or driven by a desire to exit at peak value. If you are aiming for year-end, or even Q1 next year, the legal groundwork needs to start now:
- Identify the legal and financial due diligence requirements early to uncover any issues that could affect price. Opening a data room in advance also allows the due diligence process to move faster, as the information will already be collected.
-
Optimise the valuation of your business with a health check on:
- Key supplier and customer agreements, and identifying contracts due for renewal.
- Company structure and governance, and whether it is still fit for purpose.
- Shareholder agreements and company filings, ensuring they are in order.
- Implement confidentiality agreements with the potential vendor or purchaser.
- Seek advice on heads of terms, so that you fully understand the potential terms of any deal.
Timing is everything when it comes to transactions, and getting ahead legally can mean fewer delays and smoother execution.
3. Sourcing Investment or Financing
Part of your Q4 strategy may be raising capital to scale up or simply ensuring the business has sufficient working capital to sustain operations to year-end. For SMEs, this may involve accessing financing or investment for the first time, making legal preparation essential:
- Ensure your corporate records are clean and up to date, as these will be reviewed by investors.
- Consider what changes a new investment could bring to your shareholder structure, and whether any barriers or restructuring are needed to accommodate them.
- Take advice on any term sheets or investment agreements so you fully understand the potential obligations.
The more legally prepared you are, the greater confidence you will inspire in potential investors.
4. Exploring Employee Ownership Trusts (EOTs)
TEAL Group Holdings, owner of The Entertainer, Early Learning Centre, and Addo Play Ltd, will transfer to a 100% employee-owned trust (EOT) in a deal due to complete in September. The move is part of a long-term succession plan, ensuring the Group remains independent, preserves the family’s legacy, and maintains its family-oriented culture.
For business owners considering succession planning or looking to reward their teams, an EOT requires careful legal preparation:
- Understand the legal structure and tax advantages of EOTs.
- Assess whether your business qualifies and what changes may be needed to implement the trust.
- Begin conversations with advisers early, as these transactions take time to structure properly.
Implementing an EOT can create long-term value but requires legal and strategic coordination to ensure it is executed correctly.
Conclusion
Whether your focus is growth, exit planning or operational stability, legal strategy should be a central pillar of your business plan for the remainder of the year. Addressing legal considerations now can reduce risk, unlock opportunities, and set your business on the right path into the new year.
