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Top tips for exporting
Preparing a business for sale
0844 967 0785
Creating brand value
Don’t let hard times land you in jail
Bournemouth Southampton London
Sterling’s devaluation should have made the
task of exporting easier and exporting
reduces the dependency of your business to
the economic fortunes of just the UK.
If you are trying to export you can
set up your own business in the
countries concerned but that is
expensive, or you may be able to
export by visiting trade shows and
selling on the internet.
Many exporters will use agents or You also have to decide whether Although we would recommend assumption you had not If you need advice specific to a
distributors in the countries they to make the appointment your agreements – and you terminated it. An alternative route particular country, we can quickly
wish to export to. Often these exclusive or not. It may be difficult definitely should have written to go is the so called ‘indemnity’ arrange that from one of our
terms are used interchangeably to get someone to take an agency agreements for this – should be route where you can specify in fellow member law firms in MSI in
but agents and distributors are two or distributorship if you don’t give governed by English law there writing that this applies. The more than one hundred countries
“Before exporting, quite different concepts. them exclusive rights to the may be non-excludable local laws agent will then be entitled to a around the world.
review your country concerned. If you do, you to take into account. In certain maximum of one year’s
An agent is someone who goes want to ensure you have parts of the world, agents and commission earnings insofar as it We are also panel members of
out and looks for orders on your adequate rights to terminate if their sometimes distributors are is fair in view of the new business the UK Trade & Investment UK
behalf. You fulfil the order and performance is not good enough. entitled to compensation on he has brought you. Advisory Network.
deal directly with the customer. Often this will be achieved by termination of their agreement.
The agent is paid a commission. minimum sales targets which, if Other EU countries apply the
not achieved, will enable you to In the EU there are non- rules differently but, if your
A distributor is someone who buys terminate. excludable compensation rights agreement is governed by
from you and then resells on his “The original designer approach of the
for agents on termination of their English law, the
If the appointment is to be agreements. The English courts
own terms and at his own prices
to his customers. A distributor is exclusive you need to consider
stop you English of a should
canthat this means anunlesscourtsdispute. prevail in
have decided the event Contact us:
therefore taking greater risk and whether you will carve out the right agent you have his
should be paid the
to sell direct to certain customers “goodwill value” of his agency 01202 786165
the discount off your sales price
will be greater for a distributor than and also to sell to OEMS if that is
exporting, you should
agreement” Before your insurance cover with
which is calculated on the basis of review david.ashplant@LA-law.com
the commission you would pay an part of your business or likely to what someone would be your insurance broker as it may www.lesteraldridge.com
agent. become so. prepared to pay for it on the need adjusting.
business will add
In any preparation for sale a quick SWOT analysis will help. From a legal point of view, it might throw
up matters such as:
1. Key employee dependency 4. Company law compliance
If so, ensure you have a robust service agreement Have you kept proper company books and
with key employees (for example, covering followed company law procedures? Failure to do
matters such as non-compete and gardening so may raise issues in a sale and a requirement
leave) and incentives to keep them on board, ie from the buyer for a retention. It is best to
offering them a stake in the company’s future regularise the position now.
success. Having to negotiate for someone’s
loyalty at the point of sale is likely to be more 5. Protecting your brand and your technology
Preparing a costly than pre-sale.
2. Customer/supplier dependency
From a commercial point of view, you will want to
Have you done what you can to establish a
brand? Branding your business can add
significantly to its value. Obtaining trade marks to
assist with this is not particularly expensive. Also,
business for sale try and reduce this. From the legal perspective,
you should look to put in place suitable written
contracts if these do not already exist and also
have written contracts with all major suppliers and
do you have procedures in place to protect your
company’s know how and trade secrets? Do you
ensure those that do design work and
development work for you transfer the intellectual
As the recovery starts the opportunities for those wanting customers to give a buyer greater comfort. property rights in that work to your company?
to sell their business should improve. However, to maximise
3. Problem shareholders All sorts of other issues can arise and a review with
price you need to plan well in advance and prepare a
Do you have shareholders who might seek to your legal team will pinpoint those which might need
business for sale. obstruct a sale or hold you to ransom? If so, does to be addressed. They could relate to almost
your company’s constitution give you the means anything but common matters arising include :
This includes considering legal matters – being caught on to overcome this or is there a shareholders’ environmental issues and how to deal with them,
agreement that does so? If not, addressing the problems on property leases or title to property,
the ‘back foot’ in negotiations because of something spotted
issue pre-sale is going to be easier than last intellectual property and data protection.
by the buyer’s lawyers that you have not prepared for is minute deals when your negotiating hand will be
unlikely to achieve the best result for you. that much weaker.
Creating brand value
Two issues to bear in mind when you are deciding If you have a registered trade mark you don’t have “Brands sell, so
on a brand name are: to rely on a so-called ‘passing off’ claim to stop
developing a brand
others using your name. To bring a successful
1. Does anyone else already use it? If so, they passing off claim you have to show established
should improve your
may be able to stop you using it. You can reputation and goodwill and that customers will competitive position
check if anyone else is already using the think they are dealing with you when in fact they and your bottom line”
name you want to use by doing an internet will be dealing with someone else. These claims
search, checking at Companies House and are complex and expensive.
the trade mark section of the UK
Intellectual Property Office. You register a trade mark against a particular class
or classes of goods and services. If just trading in
If you plan to operate in markets outside the the UK then you would register here. If trading in
UK you should check there too. Also, other countries, you need to consider protection
remember to check what your brand name there. You can apply for a Community Trade Mark
might mean in the local language to avoid to cover the whole of the EU by going through the
any unintended consequences! Community Trade Mark Office in Alicante.
If someone else is already using the brand Remember that having chosen a name, if you use
name you want to use, it does not outside designers to come up with a style of
necessarily mean you cannot use it. It will displaying it or a logo to go with it, make sure they
depend on what they are using it for and the transfer the intellectual property rights in that
extent of their use. design to you or you will not own it.
2. Trade marking a brand name will add to its You may wish to consider holding the brand name
impact and value. If you have a registered and other intellectual property of value, such as
trade mark you can stop others using it for any secret know how, patents or copyright, in a
the products or services in respect of separate vehicle from your trading company. Then
which you have your registered trade mark. if the trading company gets into financial difficulties Contact us:
However, you won’t get exclusive trade and goes under, you can still use the brand name
mark rights to a name which is descriptive and those other items. This may not always work;
of your goods or services (eg ‘Pub Grub’ for if you are borrowing from a bank they will probably
a chain of pubs serving food) so it’s best to want security over all the companies in your group www.lesteraldridge.com
think of something unique. and not just the trading one.
Don’t let hard
When times are It recently imposed fines totalling The OFT, as well as having the
£40 million on recruitment power to impose very significant
agencies for price fixing and fines, has the power to bring
may be tempted collective boycott of another criminal prosecution against those
more than usual company in the supply of involved. Jail sentences were
times land you to get involved in
share markets or
candidates to the construction
industry. Of the eight companies
involved two are locally based:
CDI Anders Elite was fined £7.6
imposed for the first time in a case
heard in 2009 and other cases are
million (which it has recorded in its Those involved in cartels try to
customers, rig 2008 filed accounts resulting in a operate in secret but in the digital
loss for the year of a similar age of emails secrecy is not easy
bids or fix prices.
amount) and Fusion People was to maintain. The OFT offers
The Office of Fair fined £125,000 (again, a not rewards of up to £100,000 for
Trading (“the insignificant amount when its 2008 those providing information that
OFT”) comes filed accounts showed it to be in a uncovers a cartel and if a
loss making position). company involved in a cartel
down very hard if
“whistle blows” it may get
it discovers such On top of the fines imposed in any immunity from criminal
behaviour. such matter is the huge diversion prosecution and from being fined.
of management time and wasted
legal costs in dealing with the OFT Cartels may be engaged in by
investigation, not to mention the rogue or uninformed employees
adverse publicity and loss of future but their company will still face
business from angry customers. liability. It is therefore important
that companies train their staff in
Third parties suffering loss (eg this area, particularly those in
customers) can also sue for their sales. Some time and money
loss and such claims are invested now could avoid a very
becoming increasingly common. significant liability and serious
business disruption at a later date.
5 tips for
Take some time to find out about the culture and way of doing
business in your target market. Showing an understanding of
their customs will create a lot of goodwill.
If at all possible communicate in their language or at least be able
to exchange pleasantries in their language. Your foreign
competitors are likely to have local language skills.
3. Under promise and over deliver
You need to impress with your first order to establish a reputation
and secure repeat business.
4. Letters of credit
You will need to get letters of credit set up to secure payment.
Make sure you can satisfy the conditions for payment before
going ahead and that the paying bank is known to you and that
you will be able to get payment on presentation of paperwork to
their London office. Contact us:
5. Speak to the UKTI 01202 786165
There is support available for exporting. Find out more by www.lesteraldridge.com
contacting UK Trade & Investment.