Before You Sell: Remember to review your ICT service contracts to realise their full value

Published 18/07/2024
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Our ongoing mantra is that the value of your ICT business lies predominantly in your service contracts. They are absolutely the jewel in your crown so it pays to make sure they stand up to buyer scrutiny!
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Review your contract documentation for improvements


  • You want to ensure that your client, supplier and employee contracts (as well as your standard terms and conditions) are clear and not open to dispute or potential claims.
  • If you don’t feel comfortable doing this yourself then we recommend that you have your contracts reviewed professionally.

 

Ensure that client contracts are in place for all work undertaken


  • Ensure all work undertaken is covered by contract and your standard terms and conditions.
  • Take care to minimise your obligations and risk of penalties in your Service Level Agreements with clients.
  • Beyond the protection this will offer your business, documented evidence of the work you are undertaking adds credibility and more certainty to the ongoing business in the eyes of a buyer. It will also enable the buyer to identify clearly the level of service being delivered and any ongoing liabilities.

 

Make sure your employee and supplier contracts are in place


  • One of your key assets is your staff and the buyer will want to be confident that they will stay with the business after your departure.
  • A good track record of staff retention as well as appropriate contracts will do much to satisfy the buyer of the ongoing commitment of the staff to the business.
  • It’s also good practice to make sure contracts with your suppliers are in place too, to minimise disruption post sale.

 


FAQs


What are the common pitfalls that businesses face when drafting Service Level Agreements, and how can these be mitigated to ensure minimal obligations

and risks?


  • The most common pitfalls will be vague or overly broad terms, lack of clear performance metrics, and unrealistic expectations.
  • To mitigate these issues, businesses should ensure that SLAs contain specific, measurable, achievable, relevant, and time-bound (SMART) criteria. It's essential to define clear performance metrics that both parties understand and agree upon, such as uptime percentages, response times, and resolution times.
  • It’s also important to set realistic expectations based on the provider's capabilities and regularly reviewing and updating the SLAs can help manage obligations and minimise risks.

 

In what ways can companies ensure employee and supplier retention, and how do robust contracts contribute to long-term business stability and buyer assurance?



  • Create a positive work environment and build strong relationships. Offer competitive salaries, benefits, and opportunities for professional growth. All of these things will help retain employees.
  • For suppliers, maintaining clear and fair contracts with mutually beneficial terms fosters long-term partnerships. As always, communication is key.
  • Additionally, recognising and rewarding performance can boost employee and supplier satisfaction and commitment. And, of course, robust contracts will formalise these commitments, offering reassurance to potential buyers (always get professional help putting these contracts together).

 

We hope the article has been useful. If you have any questions about anything we've shared above, or you're looking for more advice on how you can make your ICT service contracts "buyer ready", then we've got plenty of experience to share with you.


Simply get in touch using the contact form below or give us a call on +44 (0) 20 8090 9380.

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About The Author

Hornblower specializes in business sales and acquisitions for the Engineering, Technology and B2B services, and Facilities Management sectors. Typical clients have a turnover of £750k to £15m. With offices in London, Nottingham, Bristol and Dublin we operate across the UK and internationally. Our main activity is selling businesses. We also provide valuations and carry out targeted acquisition searches.

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