Buying or selling a business in New York can be very profitable for everyone involved – if you take the steps to maximize sale benefits and reduce risk of loss or liability. There are many steps to take that evaluate and address all parts of the transaction and omitting or mishandling any one of them can be a costly mistake. The assistance of an experienced New York business attorney at MOWK Law can help the process run smoothly and result in a successful transaction.
Letter of Intent
A buyer who wants to begin acquisition negotiations often drafts and delivers a letter of intent or term sheet to the target company – essentially, a preliminary outline for the rest of the transaction and not a final sales contract. LOIs should be reviewed by an attorney first to ensure they aren’t legally binding and, if the buyer wants, include the ability to walk away and not be bound to negotiate in good faith if the buyer wants to stop.
For sellers, it’s important to have a prospective buyer sign a non-disclosure agreement to protect confidential information such as their operational processes, customer information, financials, and trade secrets. The process of selling a company requires providing a large amount of information to a buyer that would otherwise be kept private and whose disclosure could severely harm the company.
If, for some reason the transaction isn’t completed it’s important for a seller to protect themselves and their businesses by keeping the buyer from disclosing or using confidential information against them. Additionally, public discovery of a prospective sale can affect customer loyalty and employee retention, which can harm the business even if the sale isn’t completed.
It’s important for any buyer to perform a thorough check on the company they want to buy. Due diligence allows a buyer to understand the business and make an informed decision before closing the deal. During the due diligence period, buyers will usually ask for, receive, and analyze information related to:
- Assets and financial accounts
- Debts and liabilities
- Leases, real estate, or other property holdings,
- Tax returns
- Financial statements and projections
- Commercial agreements of major accounts doing business with the seller
- Legal and compliance issues
- Employee base
- Customer base
- Reason for selling
A skilled business attorney can help the seller gather and disseminate all information, as well as answer any follow up questions based on the information provided. The buyer may also find an attorney helpful in evaluating the information and ensuring all information has been received.
Purchase and Sale Agreement Negotiation and Drafting
When both parties are ready to proceed with the transaction, the buyer and seller must negotiate and draft a purchase and sale agreement. This agreement is a binding contract laying out every term of the sale. This can include price, payment terms, sale structure, representations and warranties, indemnification provisions, escrow details, and purchased assets and liabilities, among other terms.
New York Business Transactions Lawyer
Acquiring or selling a business is an important event both for the business itself as well as the old and new owners. To make sure you are following all the right steps, maximizing your sale and protecting yourself and your business during and after the transaction, it’s a good idea to speak with the New York business transactions lawyers at MOWK Law before closing any deals. Contact us today with your questions and start making the transaction you pictured a reality.