Where a business’s competitive difference is based on its IP (or where its major activity is the commercialisation of its IP), lack of proper protection of the IP (through a patent or trade mark) could be a major impediment to sale. It would be necessary in these circumstances to secure this protection before trying to exit the business.
The competition from low-cost countries (particularly in the Far East) could have a major impact on a business’s long-term profitability and ability to survive. Currently, China is emerging as a major threat to UK manufacturing companies, just as India is in the service sector. As with changes to legislation, businesses affected by this type of competition need to move fast to adapt, or see their value disappear.
When a business’s operations are reliant on agency agreements, it is vital that these agreements are current and in writing. Without this a business could be valueless. Business value will be affected to a lesser extent by lack of current agreements with key suppliers and key employees, but it is still important to try to lock in key employees. Note however, a related problem where the potential purchaser might not wish to keep people with whom you have employment agreements.