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.