Looking to Sell Your Business? Here are 4 Key Things You Need to Know

With any transaction, there are risks and there are rewards. Successfully selling your business? Yes, it can come with significant rewards, but first you must navigate the sale and all the potential risks that could come with it if you’re not prepared or don’t have the best legal counsel at your side. 

Below we’ll walk through four important things you need to know if you’re ready to sell your business. While this list is by no means exhaustive, it’s a good place to start when considering all the variables that can impact a potential sale.

  • Business deals can take a long, long time – Mergers and acquisitions can be a months-long process. While there are ways to speed things up such as by planning ahead and preparing important documents and contracts in advance, it can still take a half a year or longer depending on the deal – and it may not necessarily be something you want to rush. 

If you can spark interest from multiple bidders, you may be able to drive up the sale price, negotiate more favorable deal terms or both. However, this also could mean a longer marketing period for the sale. Then, once you have selected a potential buyer, there are due diligence and negotiation periods that can also add to the timeline. All in all, it’s important to be prepared for just how long it can take for a deal to go through and have experts at your side to guide you through the process, which leads us to the next point…

  • You need a great mergers and acquisitions lawyer – There’s no getting around – if you are going to sell your business, you need to hire a highly skilled attorney who has experience and success taking on cases similar to yours. 

Mergers and acquisitions are extremely complex, and making one wrong move could not only cause the entire deal to fall through, it could also land you in legal trouble. That said, it’s imperative that you prioritize finding the best attorney that you can and one you are comfortable working with. This attorney should focus on mergers and acquisitions and be able to advise and negotiate on your behalf – not to mention, be skilled at drafting and reviewing important legal documents.

This being said, the attorney works for you – they should never get in the way of a deal getting made (if you want it to) because the attorney wants to win the negotiation. 

  • Yes, you can – and should! – negotiate the letter of intent – A business purchase letter of intent (LOI) is a document shared between a buyer and seller of a business entity. It’s used as a starting point for negotiating the terms of a proposed business deal and includes binding and non-binding provisions. 

While sometimes the buyer can make you feel as if the LOI is non-negotiable, there are absolutely terms that can and should be negotiated prior to signing it, as once the document is signed, most of the negotiation power swings to the buyer. Examples of terms to negotiate include price and how it will be paid, the scope and length of any exclusivity period, indemnification terms, among others.

Often, negotiating terms is as important (if not more so) than negotiating price.

  • Your financial documents will be thoroughly scrutinized – Any potential buyer needs to know exactly what kind of financial shape a business is in before buying it. This comes as no surprise. What sometimes does come as a surprise is how underprepared sellers are for the vetting a buyer will do. 

Plan ahead by ensuring that your financial statements are prepared in accordance with generally accepted accounting principles (GAAP) and that you also have a strong understanding of every single line item making up those numbers on your financial documents.If you’re considering selling your Florida business, it’s important to plan ahead and have strong legal representation on your side. At Silverberg|Brito, PLLC, our commercial law team has extensive experience assisting our clients with mergers and acquisitions and are ready to help you with your sale. Contact us today to schedule a free consultation.

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