Our Palo Alto Business Formation Lawyer Explains the Most Common Issues
Buying or selling a business in California is a complex process that would be difficult to complete without an attorney who specializes in business law. There are a lot of moving parts involved with buying or selling a business, such as obtaining and signing the proper documentation, securing any necessary permits or drafting new employment contracts. If you are selling a business, then be prepared to negotiate the terms of the sale, including documentation finalizing the sale. If you are buying a business, then there are likely a dozen or more procedural requirements you would need to meet to make the process run smoothly.
Our Palo Alto business formation lawyer can help during any step of the selling or purchasing process. Below, you can find more information on some of the most common issues with buying or selling a business in California.
Issues With Selling a Business in California
There could be issues involved with selling your business in California. Perhaps the most well-known potential issue is that your current employees could find out about the sale. Some employees may seek employment elsewhere as a result, so confidentiality is extremely important during the sales process.
Without confidentiality, it may not be possible to sell your business without experiencing serious problems. Our business law attorney could draft any agreements that would be necessary for protecting the confidentiality of the sale.
Additional issues that may arise when selling a California business include:
- Determining the value of your business/valuation. You need to determine the value of your business so that you know what to offer. Keep in mind, you need the value, not just a rough estimate. An attorney may work with other professionals to obtain a real valuation for your business. You will also need to find a buyer, if you have not done so already.
- The escrow process. You may need to go through the business sale escrow process to sell a business in California.
- Negotiations. Chances are, you will need to negotiate the terms of the sale with the buyer. Negotiations may not only go over the final pricing specifics, but what will happen to specific operations or employees after the sale finalizes. Additionally, negotiations may include the terms of financing and interest, depending on whether the buyer stretches the purchase over time.
- Documents and agreements. If your business has current clients, you may need to square away matters with them before you can sell your business. Documentation at your business should provide the buyer with a clear idea of how the business was operated.
- The terms of the sale. You will also need to spell out the terms of the sale, such as whether you are selling certain assets or the entire entity.
Issues With Buying a Business in California
You may also experience some of the issues above when buying a business, but the process may be in reverse. Ideally, when you buy a business, there is maximum transparency throughout the process.
Few scenarios could be worse than purchasing a business only to discover the seller’s opaqueness hid numerous problems. You do not want to inherit any legal or financial problems from a business. Fortunately, a business law attorney can help with transparency during the purchase process. Ultimately, your attorney can help you assess the risks involved with buying a business.
An attorney can help with the purchase and sale agreement as well as reviewing any existing documentation or contracts at a business that is for sale. Additionally, an attorney can help you draft confidentiality agreements that protect the outcome of the purchase.
Due to the reasons listed above, there are generally more tasks involved with purchasing a business. Failing to do your due diligence before purchasing a company is likely to end in disaster. Do not take any chances. Work with a business attorney.
Contact Our Palo Alto Business Formation Lawyer for a Free Initial Consultation
Our Palo Alto business formation lawyer can help you purchase, sell or merge a business. For more information on how we can help, call (650) 332-2994 or use the contact form on our site. Winghart Law Group, Inc. offers free initial consultations.