Avoiding Legal Mistakes When Selling Your Business

Close up of hand of businessman signing a form. Business man signing contract for future deal. Business man signing legal document. Male hand signing employee contract with a bond.A very common mistake when preparing to buy or sell a business is overlooking all the various legal issues involved. Legal mistakes can completely interrupt the entire process and in worse cases cost you a small fortune. It’s important to carefully evaluate the full slate of relevant legalities for the reason above. This article will explore many of the key legal points one would need to analyze before selling their business in the market.

Mistake #1 Neglecting to Have a Non-Disclosure Agreement

It’s extremely important when selling your business to have potential Buyers sign a Non-Disclosure Agreement provided by the business broker. One benefit to having this agreement signed and sealed is in the event that the deal deals through, which in most cases happen often, the buyer can’t disclose vital information of the business to other parties. Otherwise, at times where you don’t have an NDA, the Buyer can freely reveal any information whether insignificant or vital about your business. This in turn can impact any future sales.

Mistake #2 Failing to Get an Experienced Attorney

There’s occasion to cut corners, and then there are events when cutting corners or trying to cut costs to save money is a big mistake which can be explained through a business broker. One of those occasions is when prepping to sell your business and you invest in a good proven counsel that is essential. A good attorney will provide you an extensive range of legal moves that you should or shouldn’t make.

To create genuine agreements, hiring an attorney with a long-standing established experience is crucial. Majority of Sellers will face an array of risks that comes with the process of selling a business. One example would be when the Seller needs protection from potential Buyer hiring key employees away from the business. A Buyer could pass on buying the business, yet “steal” employees or weaken business in other ways that is a result of not having a fortified agreement and a sturdy NDA.

Mistake #3 Skipping the Letter of Intent

One of few legal ways to protect your interest in buying a business comes in the form of a letter of intent. In negotiating the deal, the letter of intent should be one of your key tools. The letter should contain a termination fee for the Buyer. This will benefit the seller in the event the Buyer walks away from buying the business for any reason that’s not the Sellers fault. Incorporating this clause means the Seller is drastically less impacted if the deal doesn’t go as planned. This clause will ensure that only serious Buyers are attracted to buying the business for the long term while the Seller is with the business broker.

Reap the Benefits of Ample Preparation

Above are just several of many errors that Sellers will often make and regret after selling the business. Taking the legal aspects of selling your business seriously will be a rewarding investment. You’ll have an outstanding experience if you prepare to sell your business. Working with a competent/proven attorney and business broker before you put the business on the market will guarantee a more fruitful encounter selling your business.

Copyright: Business Brokerage Press, Inc.

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