There are many reasons Florida business owners choose to sell, but there are numerous legal and financial factors to consider as you work through the transaction. Plus, complications and disputes can arise during the process, which involves a longer timeline than you might expect. The US Small Business Administration (SBA) reports that selling a business can take 6 to 11 months, or even longer, depending on whether you use a business broker or locate a buyer on your own.
Considering the many variables involved with selling a company, the parties wisely protect their interests through multiple contracts that serve different functions. Unless you have a legal background, you are at a disadvantage when preparing, reviewing, and negotiating these agreements. You can be sure the buyer has legal counsel, so it is critical to retain a Clearwater business law attorney to advocate on your behalf. An overview of the primary contracts a business buy-sell should help you understand the basics.
Business Purchase Contract
Once you find an acceptable buyer and work out financing details, the parties will execute the primary written contract that governs the sale of the business. The business purchase agreement is the document that dictates the terms of the transaction and transfers ownership to the buyer. It will cover such arrangements as:
- Stock purchase agreement, which requires Clearwater business resolutions from stakeholders to complete the transaction; or,
- Asset transfer agreement that covers the real estate, equipment, inventory, and other property of the company.
Because the business purchase agreement is the cornerstone of the transaction, it is essential to get help from a contracts lawyer with negotiating terms that achieve your objectives.
Agreements in Effect During the Due Diligence Period
After executing the business purchase agreement, the buyer has the opportunity to conduct a thorough investigation called due diligence. There is a specific legal process to follow when you have a Clearwater business for sale, so the parties will often use a letter of intent. This contract summarizes the transaction, which is detailed in the business purchase agreement.
The letter of intent is the buyer’s way of stating that it is serious about its intention to purchase the company, so it is usually prepared by the buyer. A business lawyer will review the terms to ensure they adequately protect your interests. Additional agreements that may be in effect during the due diligence period include:
- Nondisclosure agreements; and
- Financing documents, if the buyer is financing the transaction through the seller.
Post-Sale Contracts
Once ownership interests are transferred, there may be additional agreements that remain in effect to avoid Clearwater business disputes. Examples are security agreements and assignments of leases. Another important topic to discuss with a non-compete lawyer is restrictive covenants that prevent you from competing against the buyer.
Trust a Clearwater, FL Contracts Lawyer for Guidance with Selling a Business
These are a few of the contracts you will encounter when you have a Clearwater business for sale, but every transaction is unique. Our team at Clearwater Business Law is prepared to advise you throughout the process, so please call (727) 785-5100 to set up a consultation. Our office serves business owners throughout Pinellas County, and we look forward to hearing from you.