How to Circumvent Three Legal Mistakes Sellers Make
After decades of hard work, selling your business can be an exciting and rewarding time. Yet, many business owners overlook the importance of focusing on the legal matters associated with sales. This article will explore three of the most significant mistakes sellers make.
1. Use an NDA
The first critical mistake that business owners should be guarding against is skipping the use of a non-disclosure agreement. A business owner should always ensure that a non-disclosure agreement is in place before disclosing to any buyers that a business is on the market.
NDAs are an invaluable way to restrict who does and does not know your business is for sale. After all, the last thing any business owner looking to sell their business wants is for competitors or employees to learn confidential information.
2. Hire an Attorney
The second critical mistake many business owners make is skipping working with an attorney. There is no way around that if you are selling a business or anything of significant value, you need to work with a lawyer experienced in sales.
Business owners become accustomed to doing many things and learning on the job. There is no doubt that this is a personality trait that has served them well over the years. However, when it comes time to sell your business, there is zero room for “on-the-job training” or relying on your instincts. One of the best ways you can protect your future as a business owner is to work with a lawyer when selling your business. In fact, a Business Broker or M&A Advisor can be a vital resource for helping you to find a proven lawyer with a background in buying and selling businesses.
3. Get a Letter of Intent
The third significant mistake business owners frequently make when selling their business is failing to get a letter of intent. Much like an NDA, a letter of intent is a critical legal document in selling a business. Business owners will often skip requesting a letter of sense out of fear of slowing down the process and potentially disrupting a deal.
The letter of intent is designed to clearly spell out expectations while simultaneously protecting your interests as a business owner. When a buyer signs a letter of intent, it indicates that he or she is taking the process seriously. This will protect you from wasting your time.
The process of buying or selling a business is complex in many different ways. Whether it is dealing with human psychology, organizing your books, thinking about what information prospective buyers are likely to want to see or addressing a wide array of legal issues, it is a complex and time-consuming process. Working closely with a Business Broker or M&A Advisor is one of the fastest ways to increase your chances of a successful sale.
Copyright: Business Brokerage Press, Inc.
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