How to Sell Your Business Without Legal Regrets

Selling your business can be exciting, but it’s also a legal minefield if you’re not careful. Whether you’ve built it from scratch or bought into it years ago, closing a deal without thinking through the legal stuff can leave you with a long list of problems you didn’t see coming. One big question to ask early on is this: are you selling the business as a going concern? That’s a legal term with real consequences.

Selling as a going concern basically means the business will carry on running under new ownership without any major interruptions. Same staff, same operations, same contracts, just a new boss. If that’s the case, then section 197 of the Labour Relations Act kicks in. What that means in plain English is this: your employees don’t get fired and rehired. They stay on, and the buyer takes over all their existing employment contracts, with all the benefits and obligations that come with them. So no, you can’t quietly cut staff loose just because you’re leaving. And no, the new owner can’t just decide to start from scratch with cheaper labour. Everyone moves over as is, unless there’s a separate agreement in place with each employee, and even then it has to comply with labour laws.

This is why your sale agreement needs to be airtight. It should be crystal clear on whether the sale is a going concern, what happens to the staff, and who takes responsibility for things like unpaid leave, bonuses, and any ongoing disputes or disciplinary cases. If you’re the seller, you don’t want someone calling you months later because of a CCMA case you thought was no longer your problem.

Another key area to think about is due diligence. The buyer is going to want to go through your books, contracts, compliance records, and anything else that gives them confidence they’re not buying a mess. Labour issues form part of that. Do you have signed contracts for all your employees? Are you up to date with UIF, PAYE, and statutory compliance? If not, clean it up before anyone starts asking questions.

Valuation is also a biggie. You want to get the best price, but also a price that makes sense. If your business depends on certain employees or supplier relationships, make sure those are in place and secure. A buyer isn’t just buying your balance sheet, they’re buying the relationships and systems that keep the wheels turning.

Lastly, don’t forget about intellectual property. If you’ve built a strong brand, app, or digital presence, those are real assets. Make sure they’re registered properly and included in the sale. If the IP is under your personal name, sort that out before the sale goes through. It’s no use handing over a business if the buyer can’t legally use the name or tech that keeps it alive.

Selling your business is a big move. Done right, it should leave you feeling proud and free to move on. Done wrong, it can drag you into fights you thought you’d left behind. So take the time to plan it properly. Think through the legal implications, especially around staff, contracts, and the sale structure. And don’t be shy to get help. You’ve worked hard to build your business. Make sure you walk away on solid ground.

The StartUp Legal offers expert legal services tailored for SMEs, helping you secure a winning edge. For personalized support, book a complimentary consultation: https://calendar.app.google/thxigR9yhDAu4LP86 or email us at hello@thestartuplegal.co.za.