Looking to sell a business? The process can bring a lot of questions as it’s not as simple as making a Craiglist post and hoping to find a potential buyer. Here is a general overview of the process. More detailed information on each process will be coming in future posts:
Before you go looking for buyers, it’s important to make sure the business is in good shape to transfer. It’s similar to getting a house staged and ready for showings. Make sure that your books and records are in order, liabilities and contracts are inventoried, and objectives for the sale are identified. By having a good foundation for the sale, the later steps will go far more smoothly.
There are many ways to find potential buyers. You can hire a broker, put an ad out, or use your network to get interest. It’s helpful to have informational sheets about the health and status of the company. In addition, it is useful to have a Non-disclosure Agreement ready so that you can show potential buyers the inner workings of the company without disclosing potentially sensitive information.
Once you’ve found a buyer, the major legal work starts up. The general terms get refined to specific language that ensures each party is protected and receives what it is expecting. In addition, there may be third parties that are involved in transferring licenses and agreements, and a thorough review of the business (due diligence) can occur. The final sales agreement is usually a set of documents to execute the transaction — not just one simple form. Be careful about using forms from the internet to finish a deal; often, you might not know to ask an important question or include a term, and it can come back to bite you later.
Once the details are all set and the deal is ready, a final set of documents is prepared and each party executes the necessary forms. The deal can be closed and each party can move forward toward more exciting opportunities.
Obviously, selling a company (even a smaller business) involves a lot of detail and experience to make sure that everything moves forward as expected. Many questions can arise, such as whether it is better to buy the stock or assets of a company, whether you can transfer a lease, whether you need to get new permits, or what happens if an unexpected condition arises?
Because the sale of a company is such an important and complex task, it’s vital that you get an experience Minnesota business attorney to advise and assist with the transaction. If you are purchasing or selling a company, call Eric Rice at (651) 998-9660 for a free consultation to learn about your options for this transaction.