Getting Ready to Sell a Business?
By Phillip Leaman
20 May 2013
Get your house in order and protect your confidential information!
When you decide to sell your business it is important that you deal with any issues in the business prior to placing the business on the market. For example, you should endeavor to recover any monies owing to you and ensure that your are not in default of any agreements which might jeopardise any sale (i.e. being in default under a lease).
Does the entity that you think will be the vendor (the owner of the business) have a right to sell all of the assets that comprise the business? It might be that some assets need to be transferred to the current legal entity or you may need to include multiple parties as the “Vendor” in the contract of sale.
In some circumstances you will need to review the constitution (if a company) and trust deed (if a trust) to see if there are any restrictions or procedures which need to be followed to allow the sale to proceed.
If you are considering selling your business, it is important that you do not divulge trade secrets, profits and other confidential information without ensuring that a purchaser signs a confidentiality agreement. This will be beneficial should the Purchaser not proceed with the sale. There are limitations of such an agreement and sometimes it is best to withhold some information until a formal contract is signed or settlement has proceeded. The contract can also be conditional upon a short due diligence period if the Purchaser is unwilling to sign up without knowing a bit more of your business.
As a vendor, make sure a confidentiality agreement is signed by a prospective purchaser.
As a purchaser, undertake a thorough due diligence of the business you propose to purchase.
Tisher Liner FC Law have significant experience in all business law matters. We can assist in:
- The preparation of confidentiality agreements;
- The preparation, review and negotiations of sale of business/asset agreements; and
- Advice in respect to structuring for purchasers and vendors.
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