How Hiring A Lawyer Can Help In Selling A Business
Selling your business is a complex transaction that might include an emotional factor if you have invested years building your enterprise. Advice from an Indiana lawyer will help you decide the broad details of your business sale before you engage in any conversations with a buyer. Going forward, a lawyer can supply many insights about financing, valuation, and contracts.
- Explain Approaches to Selling and Financing
Sole proprietorships, partnerships, and sometimes limited liability companies and corporations transfer ownership through asset sales. During an asset sale, the seller primarily sells the valuable parts within the business instead of the actual legal business entity. The company assets being transferred can include tangible items, like equipment and inventory, or intangible items, like trademarks or patents. Separate conveyances will be needed to document and detail each asset being sold.
A stock sale, in contrast, involves the buyer acquiring an ownership stake via the purchase of the seller’s stock. This transaction does transfer the legal business entity into new hands. The negotiation of a stock sale could involve a seller selling off certain assets or resolving certain liabilities before the new owner takes possession of the stock. Noblesville lawyers at Webster & Garino can help you evaluate the advantages and disadvantages of an asset sale versus a stock sale. Legal advice can allow you to make informed choices about the division of business property and debt that reflect your overall goals and limit liabilities.
Seller financing represents a large issue that a business owner should ponder before putting a business on the market. A seller’s willingness to finance all or part of the transaction could attract more buyers and increase the price, but taking back a note for the business presents certain risks the business owner should consider before agreeing to finance the sale of the business. A new owner who fails at the helm of the company might force the seller to reclaim ownership or lose everything. Increasing your understanding of the risks may aid you in the decision about whether you should finance the sale or not.
- Prepare Disclosures about Business Assets and Liabilities
An Indiana lawyer can organize the essential documents necessary to accommodate a potential buyer’s desire to perform due diligence. Legal guidance will help you place a value on your tangible assets and intellectual property with the support of an accountant or business valuation consultant.
As a seller, you will need to supply thorough financial statements, previous tax filings, current inventories, asset lists, and real estate information. Disclosures about leases, existing contractual obligations, outstanding debts, and maintenance records for equipment and buildings will also require preparation. By having your business records up to date and ready for review, you could avoid lengthy delays tracking down paperwork when an interested buyer makes inquiries.
- Prepare Initial Purchase Agreement
After establishing your business valuation and approach to selling, a lawyer can write the terms for your purchase agreement. This document will strive to protect your interests as much as possible and represent your opening position during negotiations with a buyer. Your prototype purchase agreement will define your priorities and allow you to focus discussions with a buyer on price instead of the entire character of the transaction.
By working with an Indiana lawyer to prepare records necessary for due diligence and drafting a purchase agreement, you can more easily inspire a buyer’s trust and shape the final deal. Carmel lawyers knowledgeable about business law can provide you with a free initial consultation when you are thinking about selling your business. Call our office at (317) 565-1818 today.
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