Get the Business AssessedWhen it comes time to sell a business, you need to make sure that you receive a competitive price. While you may have a good idea of what you think the business should sell for, your best bet is to get it officially assessed. An official assessment will help you negotiate a better price.
Gather All of Your Business RecordsPrepare a full report of your business, complete with all of the records of transactions. These records need to include service providers, account managers, and everything else that goes along with the business. Try to stay organized. While you can create a hard copy, virtual copies work just as well for all items except those which the government requires originals, such as deeds and the like.
Prepare a Business Sale AgreementThe agreement to sell a business is standard in most states. It should provide all of the information necessary for transferring the business. The United States Small Business Administration (SBA) states that all sales agreements must include the following information:
- Seller's name
- Business's official name
- Necessary background information
- Assets included in the sale
- Purchase price, including any bonuses or non monetary assets that are a part of the agreement
- Breakdown and allocation of all assets
- Covenant to not compete if required
- Necessary terms for payment, such as method and amount
- Separate inventory of all assets and belongings, both included in the sale and excluded
- Representations, warranties, and guarantees by seller and buyer
- Breakdown of business information and access to confidential information
- Emergency procedures and contingencies for common problems
- Who will handle the business until it is closed down and ownership is transferred
- Who bears the risk of loss in case of damage to the business until ownership is transferred
- All applicable fees
- Brokers' fees
- Date of closing
Have a Lawyer Look Over the AgreementHave a lawyer go over the agreement to make sure that you are protecting yourself. You need the lawyer to look at your level of liability and your continued obligations in particular. Depending on the state, failure to address these issues may leave you fully liable for any damage to the business or loss in its value, meaning that you will have to reimburse the buyer. Your goal should be to limit your liability as much as possible. Having a lawyer help you to draft the agreement in the first place, as well as assist in the negotiation, is a wise move.
Verify All InformationBefore signing the agreement, double check to make sure everything is correct. Once the agreement is signed, it becomes fully binding, meaning that the you can only change key terms or definitions is if you both agree. Also, remember that in all states, the contract will be construed against the drafter. This means that if you had the contract drawn up, you will not get the benefit of the doubt. In situations where it's a close call, the court will side with the other party. So make sure that everything is correct before you sign.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.