Buying or Selling A Business
Support Every Step of the Way
Buying or selling a business is a major event, and having professional support can make all the difference. Our firm can guide you through every key stage of the purchase and sale process, from initial negotiations to post-closing tasks.
Navigating the Purchase and Sale Process
The purchase and sale of a business is a significant event for both the new owner and the seller. A team of professionals often provides support throughout this process, including lawyers, accountants, lenders, insurance brokers, and business valuators.
Initiating Negotiations and Deal Structuring
Typically, the process starts with verbal negotiations between the buyer and seller regarding a potential deal. Confidentiality agreements may be signed at this stage. They then decide on the structure (e.g., whether the purchaser will buy shares or assets) and the conditions of the sale. The buyer and seller also agree on the price and the payment method. A lawyer can offer legal advice on the structure during early negotiations.
Once the structure and pricing are agreed upon, an initial agreement, sometimes called a letter of intent, may be prepared. This document sets out the key details of the agreement and allows for due diligence to commence. At this stage, the buyer may also begin securing financing if necessary.
The Importance of Due Diligence
Due diligence is crucial in any transaction. This process helps identify and address potential issues as early as possible. It allows buyers to avoid problems, such as tax or legal liabilities, before closing the sale. Sellers can also benefit by addressing issues before the sale to avoid unnecessary liability from over-promising. Lawyers assist with legal due diligence, while accountants and other financial advisors handle financial and tax due diligence.
Drafting the Purchase Agreement
Once the general terms are agreed upon, a definitive purchase agreement is drafted, usually by the buyer. This agreement outlines all essential elements of the transaction, including the seller’s representations and warranties about the business. Both parties should have their lawyers review the agreement before signing to ensure interests are accurately represented.
The Closing Process
The purchase agreement will specify a closing date, which is when the transaction will be completed, and legal title to the business’s shares or assets will be transferred. In connection with the closing date, lawyers will prepare the necessary corporate approvals and ancillary agreements for signature. They also help ensure that all conditions of closing are satisfied or waived.
Post-Closing Actions and Responsibilities
After the shares or assets of the business have been legally transferred to the buyer, several post-closing steps are required 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 submitted. Many transactions include a working capital adjustment to the purchase price, which will be completed in the first few months after closing.
Ready to Take the Next Step?
Navigating the intricacies of buying or selling a business can be challenging, but with the right guidance, it doesn’t have to be. Our firm is here to support you every step of the way, ensuring a smooth and successful transaction. If you’re ready to take the next step or have any questions, please reach out to us today.