Contracts You Have to Sign When Buying or Selling a Business

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.

Confidentiality agreement
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.

Sales memorandum
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

Purchase offers
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.

Business broker Orange County

What Client’s Say

We Couldn’t Be Happier

"When we thought about selling we had no idea what our business was worth or how to go about selling. What you were able to do was to cut through the fog so that we understood the valuation issue and had a comfort level with the process. As you know we ended up selling for somewhat more than the original valuation and we got all cash and our CPA loved the way our tax liability was minimized. We couldn’t be happier!"

Over $250,000 More

"Our first contact with you shocked us when you suggested that we wait 18 months before selling because you believed that if we hit our projections that the value would be significantly greater. As it turned out we not only followed your advice but also got slightly over $250,000 more than we originally had hoped for. It is seldom that we have had the opportunity to deal with a firm that doesn’t want both money and a commitment NOW. It was clear and obvious that you had our best interests at heart."

You Got the Valuation We Agreed On

"You did a great job on the sale of our business in really beating the bushes for buyers, including a UK company that was an active suitor. You managed to get the valuation that we had all agreed upon and got it substantially all in cash and got the transaction closed with little to no problems or expensive lawyers involved."

Thank You for Handling Our Business

"Our business was smaller than what your firm normally handles but it was a BIG part of our net worth and savings. Thank you for handling our business and we were very pleased and delighted with the results."

More Than Anticipated

"Our transaction was involved as we had different corporate entities located in different states. Our only regret is that we didn’t retain your services before 2012 when we paid $25,000 to a firm in Texas that did a valuation and market analysis for us before then failing to do anything in the way of trying to sell our business. You got it sold for more than anticipated."

The Sales Process