How to Sell a Company

It is sometimes important to shut the doors and hand over the reins. Selling a company is more difficult than beginning one, so here are some pointers.

What you’ll discover:

Get the Company Evaluated
Collect all of your company’s records.
Draft a Company Selling Agreement and have a lawyer review it. Check all information.

Whether it was always your intention to sell the company or you simply need an exit strategy, it is sometimes essential to shut the doors and hand over the keys. Selling a company is more difficult than beginning one. Nonetheless, as long as you’re organized, you should be able to get everything done rather fast.

Get the Company Evaluated

When it comes time to sell a firm, you must ensure that you obtain a fair price. Although you may have a fair sense of what the firm should sell for, getting it legally evaluated is your best chance. An official evaluation can assist you in negotiating a better price.

Collect all of your company’s records.

Create a comprehensive report on your company, including all transaction information. These documents must contain service providers, account managers, and everything else related to the firm. Maintain your organization. Although physical copies may be made, virtual copies work just as well for all things except those for which the government demands originals, such as deeds.

Create a Business Purchase Agreement.

Most states need a company purchase agreement. It should include all of the information required for the company transfer. According to the US Small Business Administration (SBA), all sales agreements must contain the following information:

Name of the seller
The official name of the company
Background information is required.
Assets offered for sale
Acquisition price, plus any incentives or non-monetary items included in the agreement
All assets are broken down and allocated.
If needed, you agree not to compete.
Payment conditions such as method and amount are required.
Separate inventory of all assets and things, both included and excluded from the sale
Seller and buyer representations, warranties, and guarantees
Access to sensitive information and the breakdown of company information
Procedures and contingencies for typical difficulties in the event of an emergency
Who will manage the company until it is closed and ownership is transferred?
Who carries the risk of loss in the event of company harm until ownership is transferred?
All applicable charges
Broker commissions
The closure date

Note that you may always add to the agreement as needed, but at the very least, you must contain all of this material. Remember that, in most places, oral agreements do not count owing to the Statute of Frauds. Although there are few exceptions, it is generally advisable to incorporate any oral commitments in the actual contract. If a disagreement arises, this will assist to minimize misunderstanding and confrontation.

Examine the Agreement with a Lawyer

Consult with a lawyer to ensure that you are adequately protected. You need a lawyer to examine your amount of culpability, as well as your ongoing duties. Depending on the state, failing to fix these concerns may subject you to complete liability for any harm to the company or loss in value, requiring you to pay the buyer. Your objective should be to restrict your obligation to the greatest extent feasible. It is a great decision to have a lawyer assist you in the initial preparation of the agreement as well as in the negotiation.

Check All Information

Before signing the contract, double-check that everything is right. Once signed, the agreement becomes totally binding, which means that you may only amend important terms or meanings if you both agree. However, keep in mind that the contract will be interpreted against the drafter in all states. This implies that if you drafted the contract, you will not be given the benefit of the doubt. In tight cases, the court will rule in favor of the opposing party. Hence, before you sign, double-check everything.