So you want to sell your business, but you’re not sure where to start. The legal aspects associated with selling a business might be unknown territory for you. Let’s answer a few common questions to help clear things up:
What is a letter of intent?
One of the first things you will do when you decide to sell your business is draw up a document that outlines the terms of the sale and the price you and the buyer have agreed to. It is (usually) a nonbinding letter that promises confidentiality, while allowing the buyer to investigate your business further, commonly known as a due diligence investigation.
What is a purchase agreement?
The lawyers of both parties negotiate the purchase agreement. This agreement includes information on what is included, the financing of the purchase, if applicable, and contains any supplementary contracts (consulting agreements, non-competes, etc.). If the buyer is not paying cash for the business, the lawyers of the buyer and seller will also figure out the specific terms of payment. This purchase agreement is usually structured so that if one party ends up walking out on the sale, the other party is protected.
What happens to my employees?
It’s important to first check the contents of your employment agreements for each employee, and be sure they include a provision explaining what will happen if the business is sold. This is essential to ensuring the fair and legal treatment of your employees when it comes time to sell. If your are selling that stock or shares of your business, your employees may be kept on by the new owner. If you are selling the assets, your employees will most likely either lose their jobs or have to be rehired by the new business.
How do I hire a lawyer?
Having a lawyer is essential if you’re going to sell your business (or buy a business) to ensure that the entire process goes smoothly. If you aren’t well-versed in the more intricate details of selling a business, it’s best to find a business law professional with plenty of experience and a history of great success in their field.
DK Rus Law is owned by D. Kathleen Rus, a business lawyer with over 25 years of experience in her field. Her practice focuses on two areas – Transactional Business Law and Estates & Will and Trusts. She has many years of experience working with small businesses and is happy to offer professional services for processes like buying and selling a business. Contact her today to set up a free consultation!