15 Jun Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent article from Viking Mergers & Acquisitions entitled “Deal Structures: Legalities to Negotiate When Selling a Business” discusses negotiable legal components of a business deal structure. It is important for sellers to be educated on these negotiable components so that they can work out a winning deal.
4 legalities to negotiate when selling a business include:
- Representations & Warranties – these help the buyer understand the business and establish the seller’s liability for losses that occur before closing
- Allocation Of Purchase Price – how the buyer and seller will handle the purchase price allocation across asset classes
- Non-Compete And Non-Solicitation – how long and where a non-compete is agreed to be in effect for the seller
- Baskets & Caps – the upper limit on losses and damages a buyer is entitled to recover from a seller and the dollar amount of losses and damages that the buyer must incur before they are entitled to compensation from the seller
A recent article from JD Supra entitled “How to choose a lawyer for the sale of your business” offers advice for business owners who are preparing to sell regarding the selection of an attorney to represent them in the transaction. While a business owner may have an attorney they work with for normal business matters, it is a good idea to speak with business transaction lawyers who are experienced in the sale and purchase of businesses.
When speaking with these business transaction lawyers, ask the following questions:
- How will you add value to the transaction?
- What kind of transactions have you worked on?
- What resources and capabilities does your firm provide?
- Have you structured and closed deals incorporating the latest M&A trends?
- How will you fight for me?
- How much will all of this cost?
A recent article from Entrepreneur entitled “Selling a Business Starts on Day 1: Here’s What Founders Need to Know” explores the importance of having an exit strategy long before you intend to sell your business. By having an exit plan in place, you are securing your financial future.
Helpful tips when creating an exit strategy include:
- Be prepared for any possible sale scenario
- Have thorough documentation
- Utilize the insights of trusted advisors such as your attorney and board members
- Innovate to spur strategic growth so that when the time comes to sell, your business is worth more
- Determine what success looks like to you so that you can strive for that success