Buying And Selling A Closely Held Business Case Study

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Buying and Selling a Closely Held Business

The purchase and sale of a business can be a highly lucrative transaction for all parties involved. However, to maximize the benefits of a sale and reduce the risk of unnecessary losses or liability, you need to take many steps to properly consider and address every aspect of the transaction. There is a lot at stake when ownership of a company changes hands. Any error or omission during this process—on the part of either the buyer or the seller—can prove costly. If you want to purchase or sell a company, you need the assistance of a highly experienced business attorney from the beginning.

At Braverman Law PC, we help business owners and prospective purchasers successfully complete transactions that
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This is not the final sale contract but instead a preliminary document that serves as a type of roadmap for the rest of the transaction. The buyer announces its intent to purchase the business and the seller agrees not to consider other offers for a certain time period.

The letter of intent will not set out the final terms of the deal but is an agreement to negotiate terms. This includes cooperating with due diligence and other steps of the purchase process. A prospective buyer will draft the letter of intent and then the seller can negotiate different terms if desired. Hire a skilled contract attorney to review any possible draft of a letter of intent and identify more favorable terms to negotiate.

Because this is a preliminary agreement, letters of intent can be difficult to enforce as binding contracts. You need to ensure your letter of intent fully protects you from losses if the other party acts in bad faith to jeopardize the transaction or from liability if you get accused of acting in bad faith.

Non-disclosure
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However, if the transaction falls through for any reason, the seller wants to know that the other party does not make public or use against the company any confidential information.

In addition, if the public finds out that a potential sale of a business may take place, it can affect many aspects of the business. A company could lose loyalty from employees or customers, which could have lasting effects even if the sale never goes through.

To fully protect itself, a selling company should draft a thorough NDA. A prospective buyer also wants to ensure that the terms of an NDA are reasonable and not overly restrictive. All parties should review and negotiate the terms of an NDA with skilled lawyers.

Due Diligence
Determining the appropriate price of a closely held business is critical for both sides of a transaction. The buyer does not want to pay too much and the seller deserves to receive the full value of the company. The process of due diligence will answer many questions that help to justify a particular price and build confidence in the transaction. A possible buyer should receive and carefully analyze the following information during the due diligence

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