What the Purchase Offer Should Include when Buying or Selling a Business

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:

Confidentiality
Exclusivity
Indemnities
Warranties

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.

Due diligence
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:

Legal
Financial
Commercial

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.

Business broker San Diego

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