Selling and or buying a business involves several important steps to ensure a smooth handover to a new owner – which steps include conducting a proper due diligence, preparing enforceable contracts, risk management and contract review, negotiations, delivery and settlement implementation.
Usually the first step is due diligence. Due diligence is the process of investigating the business and its operations to give you more information about what you are purchasing. A business lawyer can assist during the due diligence phase of a business purchase.
A proper due diligence will not only ensure you do not pay too much (as you would have a good idea of the business’s value once properly done), but also significantly reduces your financial and legal risks. A due diligence investigation will differ from business to business, but will most likely include the following:
Generally, the seller will prepare the sale agreement and send it off to the purchaser to review. The purchaser will with the guidance of his business attorney, suggest amendments where needed and try to push back on sticky issues and negotiate more favourable terms. This is where a professional business attorney shows real value, by guiding his client on what to push back on and which terms are rather standard. A less experienced attorney may get stuck on an issue which really should not be a sticking point, which could potentially lead an increase of legal fees and even the deal to lead to dead end.
We advise on all aspects of buying and selling a business and our experience extends to both buyer and seller interests. It is extremely important to lay the proper foundations prior to signing any business sale agreement, so as to avoid any costly litigation in the future.