Completing Your Sale
The period between offer and approval and closing could be the trickiest. Contingencies need to be removed, 3rd parties must get entangled, and the final details need to get nailed down. Required research, the method in which a Buyer will perform the jobs critical to confirm the financial and operations information represented by the Seller, and a Seller will confirm the finance and business strength of a buyer, is usually the 1st action item that follows offer and acceptance. A buyer could have his accountant aid or perform required Due Diligence.
To keep up a smooth exchange, and to reduce the potential damage in the event of a sale fail, we provide one or two tips referring to Due Diligence:
- Don’t permit in depth required Due Diligence to be performed till offer and acceptance has been reached.
- Have a clear time-frame incorporating the process. A time-frame in which mandatory info will be supplied, and a time-frame in which required Due Diligence will be finished, keeps an exchange moving in a forward motion.
- Don’t move on to other contingencies concerning 3rd parties (lease transfer arrangements, provider transfer agreements, for example), till the Due Diligenc contingency has been removed.
Once all the other contingencies have been removed, your lawyer will draft the sale documents important to complete the transaction and the purchaser’s lawyer will examine and approve or make changes. It is vital that both parties are represented by legal counsel. Contracts executed in a normal business sale carry major default implications for both parties. Sale documents prepared may include a Sale Agreement, a Bill of Sale, a Non-Compete Agreement, a Security Agreement, and Private Guarantees.
Escrow closing (the conclusion of the sale), frequently happens at an escrow office or other location neutral to both parties. A business escrow service will prepare closing statements, work out and break up pro-rated costs and money, perform the searches important to convey clear title to property, file liens for the vendor, and coordinate the execution of sale documents and the collection and disbursement of sale proceeds. Escrow costs are generally split between the Buyer and Seller similarly.