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Navigating The Legal Waters

Feb 15, 2020

In Part 3 of this blog segment, we’ll look at the Legal Matters.

At Iconic Advisers, we work closely with business owners on a daily basis to manage the entire selling process.

To give you greater insights as to the process, we share here our experience about things you SHOULD DO and SHOULD NOT DO when undertaking the sale of your  business.

Part 3 – Legal Matters

 

LEGAL DO’S

  1. DO Continue running the business “as usual” which is a common representation required by a buyer
  2. DO Enlist the help of an attorney with M&A experience, preferably industry-specific experience
  3. DO Have your attorney review the broker’s Engagement Letter prior to signing
  4. DO Have your attorney review and modify the Letter of Intent as necessary to ensure favorable terms are spelled out
  5. DO Have your attorney review the Purchase & Sale Agreement
  6. DO Watch out for buyer inserting unconditional RWCs in the contract or not discussed in the LOI

LEGAL DON’TS

  1. DON’T Take your eye off the “ball” (i.e., achieving your goal of selling the business as any adverse change could affect price
  2. DON’T Assume your family attorney is familiar with legal aspects of a business sale
  3. DON’T Assume the broker is working solely on behalf of you, the seller
  4. DON’T Assume the LOI contains all necessary terms and conditions to close the deal
  5. DON’T Assume the Purchase & Sale Agreement lines up with the LOI and that new terms won’t be introduced
  6. DON’T Agree to joint and several liability unless damages are capped, have unqualified warranties and covenants

Knowledge Matters

When looking to sell your business, keep in mind it’s not just a simple process of speaking with prospective buyers that results in an offer and then signing a standard Purchase & Sale Agreement. There can be many pitfalls along the way. Working in combination with a professional team of advocates (Accountant, Broker, Attorney) will help ensure that the selling process leads to the best possible outcome for you.

Keep in Mind…

• Buyers are always in the market for profitable businesses
• Your accountant, attorney, and broker must all work together to achieve your goal
• There are good and bad ways to approach a prospective buyer
• There are many DO’s and DON’Ts related to selling your business
• Look for an experienced M&A adviser who knows the industry and can speak to all business topics: accounting, business software, legal, tax, operations, personnel, and retirement-related issues

What You Can Do

If you are thinking about selling your business but aren’t sure what your business is worth or how to go about initiating a sale, we are here to help you. Contact us for a free one-hour exit planning consultation. It is confidential and without any obligation. You only have to share a few things about your business, and we will make an overall assessment and answer any questions. This free consultation should help you in making sure that such a life-changing decision to sell is right for you.

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