Avoid these 3 biggest legal mistakes while planning to sell your existing business

There is a plenty of room for mistakes that can be made while dealing with potential buyers once you put your business up for sale. However, committing legal mistakes can not only cost you a lot of time but can also lead to the failure of your business deal. Selling a business is not unlike selling a used car, and this is why a lot of thought and planning goes into ensuring that everything turns out perfectly.

Legal mistakes constitute a major part of the reason why the process of selling a business ends up going south. That being said, let’s have a look at the top three legal mistakes that you must avoid at any cost if you want to sell your business in a successful manner.

  • Not having an attorney while selling your business:

Most sellers ensure that they have a business broker while planning to sell their business. This is, in fact, quite an important part of any business deal. A business broker can let you know the market conditions and the things to be kept in mind while dealing with potential buyers. However, this doesn’t mean that a business broker can replace the need of an attorney. You need to have a legal advisor who has detailed knowledge of the crucial aspects of any business deal.

Having a lawyer with you lets you ensure that your paperwork is ready and that any important document doesn’t go missing while the sale process is ongoing. You’ll need the advice of your attorney throughout the whole process of selling your business. There is no point in saving the money to be spent on an attorney if it ends up getting you into serious legal problems, thus affecting the success of your business deal. Your buyers can also doubt the authenticity of your offer if you don’t have an attorney to back you up.

  • Non-Disclosure Agreement is skipped:

Skipping the non-disclosure agreement can be troublesome if anything ends up going wrong with your business deal. An NDA is unarguably important document that needs to be signed by any potential buyer before any inside details of the business are disclosed. This is so as to ensure that any buyer doesn’t end up leaking the sensitive details about the business if they decide not to buy it.

Ensuring confidentiality is of the utmost importance whenever you’re about to sell the existing business that you’ve established with years of time and effort along with investment. Any leaked information about your business can end up causing you a lot of trouble that can be avoided by just ensuring that an NDA is signed.  You are not going to share any financial reports with a buyer unless they have signed the non-disclosure agreement. This now brings us to the third legal mistake.

  • Ignoring the letter of intent:

The letter of intent is yet another important legal document that needs to be signed without fail if you are planning to sell your business. This letter includes a termination fee that needs to be paid by the buyers if the deal is brought to an end because of them. Including the letter of intent makes you ensure that you only get to deal with genuine buyers, as they know that walking out is not possible without being charged. You should understand that there are a number of people looking for businesses just for the purpose of digging out some internal details about it. These buyers either do not have any credit to buy the business or are not really interested in making the deal. In fact, they might even be gathering information for your competition. Having a letter of intent will save you the trouble of getting your time wasted by such buyers.

Conclusion: The success of any business deal is directly dependent on these legal factors. Thus, you must prepare your business before actually planning to sell it and reaching out to potential buyers. Ensuring the legal documents and advisors are in place not only saves you any future legal trouble but also prevents the chance of having the deal ended abruptly.

However, legal documents differ from place to place and this is why you must keep in mind the location of the business and the selling regulations related to it. For example, if you have a business for sale in Houston, you must look into the rules and regulations of Houston itself. If your buyer is not aware of these, let them know everything in detail before the deal is finalized. This way you will be able to prevent yourself from getting into any legal trouble, thus minimizing the chances of delaying your business sale.

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