So, you’ve identified a buyer and agreed on the major terms for the sale of your small business. What now? Well, we may be biased, but the first calls you make should be to a lawyer and an accountant! Getting the right professionals involved at the outset of the deal is critical to ensuring the buyer and seller both achieve their desired outcomes.

Once you have the right personnel in place, an attorney will draft the appropriate agreement tailored to the specific type of transaction contemplated. Business purchases can take the form of a stock sale or an asset purchase. A stock sale involves the transfer of the stock or membership interests of the company, which includes the assets plus all liabilities, contracts, equipment and intellectual property..etc. An asset sale occurs when the buyer only purchases specified assets of the company, often leaving the existing liabilities with the Seller and potentially carving out other assets not being acquired. There are tax and liability advantages to each, which is why it is important to discuss the type of the sale with qualified professionals.

The purchase and sale agreement will also contemplate several other areas including restrictions on competition for the outgoing seller, continuation of employment of the outgoing seller (either as a transition consultant or employee), financing and payment terms of the purchase price for the business with allocations for the type of goods being purchased (i.e. goodwill versus hard assets), and protections for buyer and seller against liabilities caused or created by the other party. The agreement will also discuss what may happen with any real estate owned by the business.

There are many nuances to purchasing and selling a business, and we have the experience to guide you through the process. You worked hard to build your business; let us help you retire or transition with ease.