Are you planning on buying or selling a business?
Follow these 5 Steps to Ensure the Safety of Your Sale or Purchase!
Make sure to sign an NDA first.
A business sale non-disclosure agreement (NDA) is a legal contract or agreement formed by the seller and a potential buyer of a business that describes the confidential information that the seller seeks to disclose to the buyer while restricting disclosure to third parties. NDA stands for Nondisclosure Agreement (CA).
When buying or selling a business, it is critical to sign an NDA, especially if you have already begun discussions and are sharing confidential information about the business being bought or sold.
2. Review financial information and determine preliminary purchase price of business.
An entity's financial statements provide a snapshot of its financial health, providing insight into its performance, operations, and cash flow.
Financial information is essential because it provides information about a company's revenue, expenses, profitability, and debt.
It is also critical to determine the preliminary purchase price of the business in order to establish a preliminary valuation assessment of whether or not the business is a good purchase or investment.
3. Prepare and sign a Letter of Intent once you're ready to put in an offer.
A letter of intent is intended to protect both the buyer and seller of a business during the sale process. Each business transaction requires a unique letter of intent. The terms of a Letter of Intent will determine the type of experience the buyer or seller will have when purchasing or selling a business.
4. Conduct your due diligence on the business.
Before making a binding decision to buy or sell a business, you must conduct due diligence to investigate all aspects of it.
Due Diligence entails taking reasonable precautions to ensure that you are not making risky or poor decisions, overpaying, or violating any regulations or rules.
5. If due diligence shows no glaring issues and you're ready to move forward with the
sale, legally document the transaction.
Business purchase agreements are complex, with several standardized provisions. As a result, it is critical that you leave contract drafting to a lawyer in order to establish a basic working knowledge of the terms.
Please contact Serna Legal Services at (312) 601-9859 or info@sernalegalservices.com if you’d like to learn more about WHAT STEPS SHOULD YOU FOLLOW WHEN YOU BUY/SELL A BUSINESS?
This content is published by Serna Legal Services, LLC and is available for informational purposes only and is not considered legal advice on any subject matter. By viewing this content, the reader understands there is no attorney-client relationship between the reader and the publisher. The content should not be used as a substitute for legal advice from a licensed professional attorney, and readers are urged to consult their own legal counsel on any specific legal questions concerning a specific situation.