Starting a business marks the height of self-actualization for many people. There might come a time, however, to sell the business for one reason or another. Selling a company irrespective of its size and monetary value is a complicated process. Its financial and legal impact is significant. The effect is even higher for people who choose to handle this crucial exercise with an in-house team and friends and family.
Hiring business consultancy services to advise you when you decide to sell a business in Salt Lake City is essential. This will minimize your risk of getting slapped with substantial legal fines and making significant financial losses. The following are the critical legal and financial documents that the consultancy service will help you write up and form a crucial part of your business’ sale.
This is also known as a non-disclosure agreement. You and a potential buyer will enter into a confidentiality agreement if there are circumstances during the sale that will necessitate you to disclose any confidential information. This way, your information is protected from misuse by a potential buyer to a third party.
One common mistake business sellers make is providing a lot of information to anyone interested in buying the firm because they have a confidentiality agreement. However, you should still be careful that you disclose sensitive information only to those who are genuinely interested in making the purchase.
Heads of Agreement
Also called a term sheet, it outlines the conditions and terms of an agreement between you and a buyer in regards to your business’ sale in one or two pages. It saves considerable time for your transaction and gauges your buyer’s seriousness in investing in your company. Unfortunately, most business sellers overlook the essence of a term sheet in their transaction and waste a lot of time with buyers who are not serious.
Sale of Business Agreement
This document outlines the terms you and a buyer have agreed to in your deal. This is a comprehensive document that covers numerous commercial and legal issues and holds the highest legal significance in your transaction.
The sale of business agreement is a challenging document to understand without professional help. It contains warranties, limitations of liability, restrictive covenants and different types of indemnity.
In this agreement, you and your business’ buyer will agree not to compete for a set period in a defined region. In most sales, you are not allowed to compete with the person you sell your business to for a fixed period.
It is common for buyers to take advantage of sellers when negotiating the terms of a non-compete agreement since the buyers are desperate to close the deal. To protect yourself from this, you should have the terms of a non-compete agreement very early in your sale process.
Lack of the right documents is one of the primary causes of failure in the sale of a business. The above legal documents are just a few among many needed for your transaction. Hiring a business consultancy firm for your transaction is inexpensive and yet saves you a lot of time and money.