Your Legal Checklist For Selling A Business
Transferring a business from one owner-entity to another requires you to comply with many legal requirements. While doing so is not difficult, quite often the vast number of legal requirements can lead you to miss something. This could put your business sale at risk. Additionally, you can expect that the buyer will make certain demands of you.As an attorney in Edmonton, here’s my legal checklist for selling a business.
Conduct a Business Evaluation
You should not set the price of sale on your own. Rather, an accurate business evaluation is recommended. The size of your business can dictate the time period needed for a business evaluation. For example, a corporation can take several months for a business evaluation. Hence, ensure sufficient time is allocated to a business evaluation.Price negotiations tend to break down between seller and buyer because neither can come to an agreement on the business’s value. As an experienced Edmonton attorney, I’ve found that a business evaluation can lend clarity during price negotiations.
Prepare the Documents
There are a vast number of financial documents you must get ready before putting your business on the market.Balance SheetsEarning StatementsCredit ReportsCredit AgreementsTax Return StatementsEmployment Tax FilingsCash Flow StatementsPromissory NotesProperty Tax StatementsFinancial StatementsConfidentiality AgreementsA buyer will go through these documents with a fine tooth comb.
Structure Of The Sales
You may choose to sell the business through an asset or a share sale.There are certain advantages and disadvantages of an asset or a share sale. Which one you pick depends on your objective of selling the business.
Document Your Intellectual Property
Your business IP plays a crucial role in the sale. Elements like your brand name, logo and tagline, are part of the company brand. Hence, they are required to be transferred to the new owner. Additionally, also ensure that other IP like patents and trademarked brand names are documented.
Take Regulatory Approval
Certain businesses need approvals from industry regulators and competition authorities. A legal expert will be able to identify whether your business requires any regulatory approval.
Prepare an Acquisition Agreement
An acquisition agreement dictates the process of the deal. It would include assets to be purchased, approvals required, amount to be paid, and parties involved. It would also include warranties, indemnities, and restrictive covenants.
Hire an Attorney
An experienced attorney will ensure that no legal aspect is missed and the sale of your business faces no roadblocks. A good attorney would be one who is aware of the industry dynamics and has performed business sales before.Selling your business is no easy task. Use this checklist to make certain that you are doing everything correctly.If you are looking for legal assistance, you can reach out a professional law firm in Edmonton.