Langley and Surrey Commercial Lawyers
The lawyers at Taylor & Taylor Law assist clients buying and selling businesses in Langley, Surrey and the BC Lower Mainland with the legal planning required to ensure the the transaction proceeds smoothly.
What is involved in the purchase and sale of a business?
Generally, the purchase of a business starts with both the buyer and the seller entering into verbal negotiations regarding a potential deal. They then decide on the structure of the deal (for example, whether the purchaser will buy shares or assets, and what conditions will be placed on the sale). The buyer and seller will also need to decide on the price to be paid for the business, and the method by which it will be paid. A lawyer can assist by providing legal advice on the structure in early negotiations.
After the structure and pricing are agreed upon, an initial agreement (sometimes called a letter of intent) may be drafted, setting out the key details of the agreement and allowing for due diligence to commence. At this time the buyer will also begin to secure financing, if necessary.
Buyer due diligence is absolutely key to any transaction. The buyer performs a variety of searches, requests financial and legal documents from the seller, and reviews everything. Most often lawyers and accountants are involved at the due diligence stage.
The buyer or the seller (although in practice it is usually the buyer) will then draft a definitive purchase agreement which outlines all essential elements of the transaction. Before signing, both parties should have their lawyer review the purchase agreement, so that interests are accurately represented and the deal is properly documented.
The purchase agreement will include a closing date. This is the date when the transaction will complete and legal title to the shares or assets of the business changes hands. In connection with the closing date, the lawyers will prepare a closing agenda and all the necessary corporate approvals and ancillary agreements for signature. The lawyers can also assist their clients to ensure that all the conditions of closing within the agreement are satisfied.
After the shares or assets of the business have legally transferred to the buyer, there are still a number of post-closing steps to ensure the transfer is properly completed. For example, a notice of directors may need to be filed, or tax elections may need to be filed. Many transactions include a working capital adjustment to the purchase price that will be completed in the first few months after closing.
Which professionals should be involved in the purchase or sale of a business?
For many individuals, the purchase and sale of a business is a significant life event. The transaction can be complex and may involve significant negotiations between the buyer and seller. Ideally, a team of professionals will provide support throughout the process, including lawyers, accountants, lenders, and business valuators.
If you are thinking of selling your business, you may wish to consult with a business lawyer to ensure that you have your affairs in place to facilitate a sale. If you are considering purchasing a business, you may wish to seek initial legal advice to ensure that your interests are protected. You may also wish to consult an accountant to ensure that you benefit from any tax planning strategies available to you.