what lawyer do i need when selling a business

Full Answer

Should I hire a lawyer when selling a business?

preliminary negotiations. drafting a formal agreement and pre-closing review. closing. As early as possible in the process, it's a good idea to consult a lawyer and a financial adviser to help make sure that you get the deal you're after.

What are the steps in selling a business?

You may encounter the following documents after the sale:

• The bill of sale, which transfers the business assets to the buyer
• An assignment of a lease
• A security agreement, which has a seller retain a lien on the business

What is the salary of a business attorney?

is actively seeking experienced Litigation Attorneys for its Dallas, San Antonio, Austin, Houston, and Corpus Christi, Texas offices. Qualified candidates will benefit from a generous base salary ...

What does a business lawyer do?

• Developing a big picture of the situation to determine cause and responsibility — research of paperwork, facts, and situation.
• Determining what, if any, experts are required during litigation.
• Identifying case law and precedent in support of/against the assertion.
• Writing briefs for court submission that – Delineate the facts of the event. ...

More items...

What is required to sell your business?

Legal documents needed to sell a business might include some or all of the following: Non-Disclosure Confidentiality Agreement. Personal Financial Statement Form for Buyer to Complete. Offer-to-Purchase Agreement.

How do you protect yourself when selling a business?

Get clear on the actual worth of your business.Understand exactly what's being sold.Consider the value of intangible assets.Involve your accounting and legal teams.Seek out industry-specific lawyers.Retain a maximum equity stake leading up to the sale.Make sure you fully own the intellectual property.More items...•

What to do after selling a small business?

Minimize your taxes on the saleStructure the transaction beneficially. ... Seek capital gains treatment. ... Take a loss on other investments. ... Consider tax-free investments. ... Remember charitable donations. ... Consider gifts. ... Max out your IRA or other retirement plan contributions. ... Prepay your state and/or local taxes.More items...

How do you prepare a business for sale?

Preparing for saleIncrease profitability. Investors want to buy profitable businesses, so look for places where you can reduce costs and create efficiencies. ... Establish processes. ... Cultivate a loyal workforce. ... Identify and highlight tangible and intangible assets. ... “Be” the buyer. ... Effects of COVID-19.

How can I sell my business quickly?

A Summary of the Steps to Sell Your Business FastPrepare to put your business on the market.Time the sale for the right moment.Calculate the value of your business.Get professional help — broker, lawyer, and accountant.Perform sell-side due diligence.Put your business on the market.Pre-qualify buyers.More items...•

How do I protect myself as a seller on Ebay?

Any buyer can steal any item from any seller at any time by filing a fraudulent dispute. There is nothing a seller can do to prevent fraud. The only thing he can do is assess his own risk tolerance and take whatever prudent steps he can to reduce the possibility (and impact) of fraud.

What tax do I pay if I sell my business?

Capital Gains Tax when selling a business To work out your tax liabilities, you need to understand Capital Gains Tax. Capital Gains Tax is the tax applied on the profits made from selling your business, not the total amount received from the sale.

When you sell a business what happens to the cash in the bank?

In conclusion, 99% of the time, the cash in the bank is for the seller to keep. And that should be considered by sellers as part of their proceeds of sale when planning on how much the sellers will net after the closing costs and taxes that affect the sale.

What do people do after selling their business?

In fact, 40% of post-sale entrepreneurs went back to work to start up or run another business, and 25% went into retirement. Still, some do find success pursuing civic, philanthropic or personal interests.

How do I calculate the value of my business?

The formula is quite simple: business value equals assets minus liabilities. Your business assets include anything that has value that can be converted to cash, like real estate, equipment or inventory.

How should I prepare my small business?

Conduct market research. Market research will tell you if there's an opportunity to turn your idea into a successful business. ... Write your business plan. ... Fund your business. ... Pick your business location. ... Choose a business structure. ... Choose your business name. ... Register your business. ... Get federal and state tax IDs.More items...

What does the term business mean?

The term business refers to an organization or enterprising entity engaged in commercial, industrial, or professional activities. Businesses can be for-profit entities or they can be non-profit organizations that operate to fulfill a charitable mission or further a social cause.

What does a lawyer do when selling a business?

When selling a business, a lawyer often works with other professionals to ascertain the value of the company, what assets and liabilities exist and how best to ensure this information appears in a positive manner to the potential buyer. This means explaining the structure, the layout, the files and figures and how employees ...

What does a business lawyer do?

The lawyer may need to contact state officials, file documents with certain agencies and obtain licenses when buying a new company. It is his or her job to protect the owner from litigation, liability and legal injury when buying or selling a company. With a business lawyer, it is possible to achieve success. Provided by HG.org.

What is a lawyer contract?

A lawyer drafts contracts that the buyer or seller needs to sign with the other owner. These should have certain conditions to ensure the arrangement is beneficial, and when necessary, advantageous for both parties. When a company is accruing revenue, it is often necessary to have an accountant to keep the book up to date.

Why do lawyers work for businesses?

When buying a business, the lawyer may have more work than when selling. This is to ensure that due diligence is performed and all factors are considered when purchasing the new company.

What is due diligence in business?

The employees, agreements in place, clients, business associations and numerous other processes need to be checked out . A lawyer drafts contracts that the buyer or seller needs to sign with the other owner.

When is it necessary to draft contracts?

Drafting contracts and editing the terms is necessary when sealing a deal with the seller. This may even mean negotiating with the seller or his or her lawyer to ensure the best terms are attached to the arrangement. The lawyer may need to contact state officials, file documents with certain agencies and obtain licenses when buying a new company.

What are the major concerns for buyers and sellers?

Minimizing taxes and potential liability issues are usually the major concerns for buyers and sellers figuring out how to structure a deal. Minimizing taxes and potential liability issues are usually the major concerns for buyers and sellers figuring out how to structure a deal.

What does the buyer do in due diligence?

At this stage, the buyer does its investigation of the seller to determine the value of the business or assets it is buying. This usually involves an extensive review of the seller's finances and assets so the buyer can make its own determination regarding value. How much due diligence the buyer does will depend in part on whether it's a stock ...

What happens if your business doesn't cause environmental problems?

An environmental issue arises and your business is involved (even if your business didn't cause the environmental problem, you may be penalized) Negotiating for the sale or your company or for the acquisition of another company or its assets.

Do you need legal help when it's too late?

But when you do, it's good to know where to find the right one. And -- more to the point -- you may not know you need legal help until it's too late, as attorneys can help you stay in compliance with the law and spot developing legal issues early.

How to dissolve a business?

Follow these steps to closing your business: 1 Decide to close. Sole proprietors can decide on their own, but any type of partnership requires the co-owners to agree. Follow your articles of organization and document with a written agreement. 2 File dissolution documents. Failure to legally dissolve an LLC or corporation with any state you’re registered in will expose you to continued taxes and filing requirements. Look up your state for more information from the Secretary of State, Business Bureau, or Business Agency websites. 3 Cancel registrations, permits, licenses, and business names. Protect your finances and reputation by canceling any of these that you no longer need, including your trade name. 4 Comply with employment and labor laws. Reference the Department of Labor’s Worker Adjustment and Retraining Notification Act (WARN) for employee payment after closing, along with other federal and state laws. 5 Resolve financial obligations. Handle final returns for income tax and sales tax. Cancel your Employer Identification Number, notify federal and state tax agencies, and follow this checklist from the IRS with instructions on how to close your business. 6 Maintain records. You may be legally required to maintain tax and employment records, among other files. Common guidelines advise keeping records for anywhere from three to seven years.

What is a sales agreement?

Make a sales agreement. You must prepare a sales agreement to sell your business officially. This document allows for the purchase of assets or stock of a corporation. An attorney should review it to make sure it’s accurate and comprehensive.

Does Bill have a market?

Bill owns a market near his home. After the birth of his granddaughter, he now spends most of his time at his daughter's home several hours away. After transferring business ownership, Bill no longer has to worry about running his business but is still receiving a monthly income. Scenario.

Does transferring ownership of a business require tax?

Transferring ownership of a family business may have legal impacts, such as estate and gift tax obligations imposed by the IRS. A transfer of property would also likely require taxation. It’s also important to understand how to approach the exit strategy based on business type.

How to purchase a business?

When buying a business, you must review what assets you will purchase. This might include machinery, stock, customer contracts, and intellectual property. Your decision will be listed in the Asset Purchase Agreement. Make considerations and inventories for each item. Some examples include: 1 Stock: List each stock with its current value, then review at the time of purchase to make any necessary adjustments. 2 Creditors/Debtors: List all credits and debts. Any debt typically remains with the seller for repayment until the completion date. 3 Employees: When the business is sold as a "going concern," the employees will be transferred automatically. Both buyer and seller should request advice to determine the financial consequences. 4 Landlord Consents: If the business is housed within a leased facility, you will need the landlord's consent, at your expense, to transfer or assign the lease. 5 Plant and Machinery: List all plants and machinery, along with purchase dates and purchase or lease agreements. 6 Goodwill: This represents the value added over the book value related to the brand and total customer base. 7 Share Purchase Agreement: If the business being purchased is structured as shares, you will need a share purchase agreement. This document will be the main negotiation and will lay out the terms of the company shares, assets, and liabilities. 8 Contracts: Identify and review all contracts and agreements found during the due diligence process. Add any clauses needed to protect against potential liabilities.

What do you need to know when buying a business?

When buying a business, you must review what assets you will purchase. This might include machinery, stock, customer contracts, and intellectual property. Your decision will be listed in the Asset Purchase Agreement. Make considerations and inventories for each item. Some examples include:

What is due diligence in business?

Due diligence indicates the buyer will do their own research to verify all aspects of the business. This includes examining financial records, customer records, sales reports, profit and loss statements, expense reports, and the like. This review will help the buyer confirm they want to buy the business.

When a business is sold as a "going concern" does the debt go to the seller?

Employees: When the business is sold as a "going concern," the employees will be transferred automatically. Both buyer and seller should request advice to determine the financial consequences.

Do you need landlord consent to lease a business?

Landlord Consents: If the business is housed within a leased facility, you will need the landlord's consent, at your expense, to transfer or assign the lease. Plant and Machinery: List all plants and machinery, along with purchase dates and purchase or lease agreements.

Can a seller receive payments over time?

In some cases, financing will be used and the seller will receive payments over time. Avoid this, if possible, to remove the risk of the buyer defaulting on the loan. Pay attention to local and state laws that are in place to regulate the sale of the business in each state.

What happens when you sell a business?

When you go to sell your business, there is a certain legal process involved that must be followed. It’s not like you can just have the buyer write you a check and then let them take over your business. There are a few legal steps to closing the sale of your business which ensures that it will be a successful transaction for both parties. Otherwise, you run the risk of facing legal ramifications after the sale if the buyer becomes unhappy with some aspect of the business that they purchased from you.

What are the steps to take to buy a business?

When you find a buyer that is ready to purchase your business, there are 2 initial steps that must be taken before the purchase agreement is signed. The buyer can legally back out of the general agreement that you have with them until they actually sign the purchase agreement.

What happens if a buyer does not know the information about the business?

Basically, if the buyer acknowledges in a legal contract that they performed their own due diligence and are still willing to proceed with the purchase of the business, they cannot come back later and claim they didn’t know certain information about the business.

What is due diligence in real estate?

Due diligence is a term you often see in real estate documents but they also apply to the documents which pertain to selling a business. As mentioned in the first step, the terms of due diligence are outlined in the Letter of Intent. Due diligence is when the buyer does their own research into all aspects of your business. They will want to look at your financial records, customer records, sales reports, profit & loss statements, expense statements, leases, business loans, business contracts and so on. All this information will help them decide whether they want to purchase your business.

What happens if a buyer defaults on a business?

Otherwise, if your buyer defaults, then you must go through a legal procedure to reclaim ownership of your business.

How long do you have to notify creditors of a sale of a business?

This must be done within 10 days of the closing day.

Can a company sue you for due diligence?

As long as you provide them with accurate documents about your business during their due diligence process, then they have no legal grounds to sue you. All your company’s paperwork should be made readily available to any serious buyer that has signed a Letter of Intent.

Why do you need a broker for a business sale?

In other circumstances, a broker can help free up time for you to keep the business up and running, or keep the sale quiet and get the highest price (because the broker will want to maximize his or her commission).

How long does it take to find a buyer for a business?

Finding a Buyer. A business sale may take between six months and two years according to SCORE, a nonprofit association for entrepreneurs and partners of the U.S. Small Business Administration. Finding the right buyer can be a challenge. Try not to limit your advertising, and you'll attract more potential buyers.

How to invest money from a home sale?

Take some time—at least a few months—before spending the profits from the sale. Create a plan outlining your financial goals, and learn about any tax consequences associated with the sudden wealth. Speak with a financial professional to determine how you want to invest the money and focus on long-term benefits, such as getting out of debt and saving for retirement .

Is selling a business a good idea?

Selling a business is time-consuming and for many people, it's an emotional venture. A good reason to sell or the existence of a "hot" market can ease the burden, as can the help of professionals.

What documents are needed to sell a business?

Compile the following documents in preparation for your business sale: 1 Profit & loss statements for the current and past 2-3 years 2 Current balance sheet 3 Cash flow statement 4 Business tax returns for the past 2-3 years 5 Copy of the current lease 6 Insurance policies 7 Non-disclosure/confidentiality agreement 8 Personal financial statement for the buyer to complete 9 Executive summary of overview of the business 10 Detailed profile describing the business 11 Any additional documentation to substantiate the financial representations 12 Professional certificates 13 Supplier and distributor contracts 14 Employment agreements 15 Offer to purchase agreement 16 Note for any seller financing

What do buyers expect from a business?

Buyers will expect to see certain documents that show your business is profitable and a good investment. Taking the time to collect and organize the right documents will make your business more appealing to potential buyers.

Why do you need a CPA?

A professional CPA can help you identify any gaps or shortcomings that could be improved. Moreover, buyers often place more weight on financials that have been scrutinized by a qualified accounting professional. Professionally audited financials often have more validity and the potential to increase your asking price .

What is the best way to illustrate the financial value of a business?

Solid documentation of a profitable history is perhaps the clearest way to illustrate the financial value of your business. Being prepared with an organized package of documents not only reflects well on you and your business, it will ward off unnecessary stress.

How long do you need to prepare financial statements?

In order to get started in making an accurate assessment of your business, you’ll need to prepare your financial statements, ideally, for the past two to three years. Hopefully you’ve been keeping your business records in order.

Is it a good time to engage with a business broker?

This is also a good time to engage with a professional business broker. By developing a relationship with a business broker ahead of time, you’ll have the opportunity to learn what buyers are looking for, what’s in demand, and ways in which you can make your business more attractive and easier to sell. A business broker can also help you determine ...