Untold numbers of sales and purchase transactions occur every day. In some ways, the sale of a business is no different than these consumer transactions. Businesses can change hands for a number of reasons, and in some cases, these transactions occur without much thought being given to the nature of the asset – the business – being sold. There are important differences that make the sale of a business different than the sale of a car or other product, though. Failing to appreciate these differences and do one’s due diligence before consummating the sale of a business can cause undesirable effects that linger over both the buyer and seller for months (or even longer).
The buyer in a business sales transaction wants some assurance that the price he or she is paying for the business is reasonable and fair. In order to receive such assurance, the business must be appropriately valued by someone with experience in performing these complex valuations. The value of a business is comprised of more than just the value of any equipment, real estate, or other tangible assets. Any goodwill or name recognition that the business had built up should also be considered.
If a person is willing to sell his or her business, he or she does not want to outspend time negotiating with buyers who are not serious or who lack the resources to follow through on a sincere offer. Vetting potential buyers is just one of the concerns the seller of a business may have. The terms of the sales transaction should be spelled out clearly, including the duties or obligations both the buyer and the seller are expected to fulfill. The timing of the transaction may be an important part of the deal as well, but if no mention is made of when the transaction is to be completed a seller may be waiting weeks or months to conclude the sale.
Both buyer and seller benefit from a clear and comprehensive sales agreement that describes in detail the essential terms of the sale and the understanding that the parties have entering into the sales agreement. The sales agreement should also discuss potential breaches, or violations, of the agreement and what remedies the parties agree should be available in the event of such a breach. Finally, the sales agreement should spell out any financing terms if the seller is providing the buyer with financing.
Business owners and would-be buyers may lack the legal acumen necessary to draft carefully designed sales agreements and to ensure the necessary terms of such an agreement are included. Our Business Law Attorneys offer services that are designed to help buyers and/or sellers complete business sales transactions quickly and with finality. Our legal professionals can discuss your acquisition or sales goals together during a no-cost consultation. To arrange your business sale, merger or acquisition, simply call (614) 423-8276.
Walker Novack Legal Group, LLC
5013 Pine Creek Drive
Westerville, Ohio 43081
P: (614) 423-8276
F: (614) 767-0695