You’ve worked hard to build your business and you’re proud of what you’ve done. Maybe now the time has come to let someone else take over the work. Or perhaps you’ve received an offer you just can’t turn down. If you are facing the prospect of selling your business, it is important to have competent counsel on your side. Whether the sales price is Ten Thousand or Ten Million dollars, Toussaint & Coaty can provide you the representation you need.
The buyer and seller will have to answer many questions about how to structure the transaction. Who, exactly, are the buyer and seller? What, exactly, is being sold? Is the buyer purchasing only the assets of the business? The buyer could be purchasing the operating entity (corporation, LLC, etc.) in addition to the business assets. If the buyer is an experienced businessperson but is not specifically experienced in your industry, you may want to stay on with the business as an employee or consultant. In that case, you will need a contract with the buyer to govern that relationship and the rights and obligations you owe each other. Whether you stay with the business or not, your employees will also need to be considered. The buyer will likely need to know their identities, their compensation and benefits, and their qualifications. An attorney can help you clarify the scope and possible consequences of this sale.
A savvy or sophisticated purchaser will want to conduct a due diligence examination of the business’s finances, contracts, licenses, governing documents, insurance, and many other important aspects of the business and its operation. Attempting to comply with the seemingly never-ending requests for documents can be overwhelming when you’re also trying to operate your successful business. While you, as seller, have the ultimate obligation for producing those documents, an attorney can help guide you and keep you on track.
If you are leaving the business entirely but aren’t ready to get out of the industry, the buyer may expect you to sign a non-compete agreement. Colorado allows such agreements to be enforced, but there are limits to their duration and scope. It is important that you review such an agreement with your attorney. Non-disparagement clauses or agreements are also common items included in business sale contracts. You need to understand the limits those agreements place on your ability to discuss the business and with whom.
Finding a buyer or receiving an offer for your business is only the first step. Even agreeing on a purchase price and closing date is only the beginning of a potentially lengthy process. If you are interested in or already in the process of selling your business, contact the attorneys at Toussaint & Coaty today for our experience and expertise.