A good business broker San Diego will help you find the right buyers. It is the duty of a business broker not just to find a person interested in buying your business but also to do a background check to ensure the potential buyer has the means and interest to buy your business. Once you are satisfied with the initial checks and the initial offer, the next step is the firm purchase offer. This is referred to as the Heads of Agreement or Heads of Terms Agreement. This is the document that will set out the main points of the business sale. It is good to note that this document is not legally binding apart for the confidentiality and exclusivity issues.
What is included in the purchase offer?
Experienced business brokers San Diego will be able to help with the Heads of Agreement. To be on the safe side, you need to understand the details that the document should cover. They include the following:
- What the sale includes
- Price and the payment structure
- Terms of the period of exclusivity to complete the sale. This also includes the period’s termination.
- Preconditions for the business sale.
As aforementioned, parts of the Heads of Agreements are legally binding. The legally binding parts are set in separate documents. These parts include:
The Seller’s disclosure letter is another common legally binding agreement. This letter limits the liabilities under the warranties. The letter may also state that the buyer and seller will pay each other’s costs in the event of the sale falling through. An experienced business broker can help get the best terms here.
The above documents must be prepared and checked carefully. The reason for this is because if the seller fails to meet the set conditions, the sale will be terminated. If the warranties are breached, the seller can sue the buyer for damages. It is also considered to be a criminal offence for sellers to provide misleading or false information about their shares.
After the signing of the Heads of Agreement, the buyer’s business broker San Diego will go ahead with the searches into the business records. This is known as due diligence. There are basically three types of due diligence:
Throughout the due diligence stage, negotiations will still continue with the seller on how to draft the final sale agreement or the sale purchase contract. Whether you are buying or selling a business, finding the most qualified business brokers San Diego is the most important thing to do.
One of the duties of a business broker Orange County is to help you with the paperwork. In the sale or purchase of a business, you will come across several contracts. Making sure you understand each of these contracts is the key to avoiding trouble down the road. In this article we shall be taking a quick look at the main contracts you need to be familiar with as a business buyer or seller.
Contracts with advisers
There are several contracts you will need to sign. The first will be a contract with the financial adviser for the tax and finance advice. You will also need to sign a contract with a solicitor for legal advice. Another contract you will not be able to avoid is that with the business brokers Orange County. Prior to signing any of these contracts, it is imperative that you read and understand every term and condition. Don’t be afraid to negotiate the terms in the contract. Needless to say, you should only sign a contract with a professional that you have confidence in.
The purpose of this contract is to ensure that business secrets don’t get in the wrong hands. This contract is mostly drawn up by a business broker and has to be signed by a potential buyer before being shown the sales memorandum. The contract is also referred to as the non-disclosure agreement.
This is the document that introduces a buyer to the business he is interested in buying. This document includes vital information about the business. The important details you will find include the following:
- Business sector
- Duration the business has been trading
- Main financial details such as profit, total debt, cash flow and asset value
- Structure of the sale. Are you selling the whole business or part of it?
- Number, age, job description, length of service and salaries of the staff
- Location of the business premises, leasehold, rent and rates
The purchase orders have to be made in writing. After giving an initial verbal offer, a buyer must then provide a letter that sets out the main details. The offer given should be subject to contract. A good offer will include the following:
- What the buyer is offering to buy
- Offer price and the payment terms
- Information required by the buyer prior to making the offer.
The four are the main contracts you will have to sign when selling or buying a business. The best news is that business brokers Orange County will help with all the paperwork. You also need to involve your lawyer in order to confirm if the contracts are legally binding.