What Due Diligence Is Necessary Prior To Buying Or Selling A Business?
The seller of a business wants to make as much money and have as much protection as possible. There may be a situation where the seller retains a management position or some membership interest when they sell. You have to lay out what the terms are going to be for payment to the seller if it goes past the closing of the sale of the business, and any type of liability that may remain. All of that needs to be considered when you are doing your due diligence.
If it is the sale of a business that involves an unimproved property, then you have to do a Phase Two inspection, where you may be testing the firmness of the soil to make sure that you can actually build on the property. If you are selling or buying a business that is worth any money at all, you should have an attorney involved.
Should The Buyer Or Seller Of A Business Close If Problems Are Not Resolved?
The time to try to resolve problems is before closing. If a buyer or a seller backs out of a business deal, there are contingencies. The real problem comes after closing if one side or the other is not happy. There may be contingencies for voiding the agreement or there may be a liquidated damages clause that could include fees or rescission of the contract that is broken. A lawyer is needed to anticipate what problems might pop up between the time of agreement and the time of closing, and what potential problems could pop up after the closing from the sale of the business.
Will My Attorney Prepare The Buy-Sell Agreement For My Business?
The attorney should prepare all agreements. You should have a business law attorney prepare the buy-sell agreement. If there is real estate involvement, it would be advised to have an attorney who also has real estate experience. Agreements need to be analyzed and looked at by a professional and drawn up by a professional as well.
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