As M&A lawyers, we understand that the business sale process can seem complicated. It’s our job to make this process as straightforward as possible for our clients. But to give you an idea of the process and how a business sale lawyer in our M&A team can help, here’s a guide to the business sale process:
Step 1 – Book a consultation with a business sale lawyer
We recommend that you book an initial consultation. This will ensure that important dates, commercial and legal considerations are discussed as soon as possible. You can book a consultation here.
During the legal consultation, we will discuss the business you are selling, how it is structured, what assets / shareholdings are being sold and potential ongoing legal matters. We will also take the time to understand your goals and concerns.
We will provide our initial view on the business sale process
Step 2 – Prepare a terms sheet for the sale of the business
If the seller hasn’t already negotiated the general terms of the sale, our business sale lawyer can do this for you. A terms sheet will record the high level terms that the buyer and seller have agreed to. This terms sheet will later form the basis of the business sale agreement.
The terms sheet may also be written as a ‘letter of offer’ and it is important for it to contain strict non-disclosure obligations. Alternatively, we can draft a separate non-disclosure agreement. This will ensure that there are legal protections around the non-disclosure of information belonging to the seller and the business that is being sold.
Step 3 – Prepare and gather information for due diligence
The buyer is likely to want to carry out due diligence. This process involves gathering documents and adding them to a ‘data room’. This is generally a cloud-based drive that the seller can put documents into for the buyer (or the buyer’s lawyer) to access.
The information is likely to include financial statements, contracts (including customer and supplier contracts), licences, permits, leases, employment agreements, intellectual property rights, and details of any pending litigation or legal matters.
As the legal representative of the seller, we may also conduct our own due diligence of the buyer. For example, to ensure that the purchaser of the business is financially able to complete the business purchase transaction.
Step 4 – Preparing and negotiating the business purchase agreement
Your business sale lawyer will represent you negotiating the terms and conditions of the sale of the business with the buyer or their legal representatives.
Our M&A lawyers will focus on key aspects of the business sale agreement, including price, warranties, conditions-precedent to completion, indemnities, guarantees and any withholding amounts.
As the seller, you will be involved every step of the way. However, we will do the hard work for you and explain, in plain-English terms (without using complicated legal jargon) what information we need from you.
Step 5 – Meeting the conditions-precedent
Once the business sale agreement has been negotiated and agreed, we will work with you to fulfil the conditions-precedent. Conditions-precedent may include obtaining landlord consent, the consent of shareholders or negotiating with other third parties.
Step 6 – completion of the sale of the business
Your business sale lawyer will prepare transfer documents, close out any employment matters, terminate or transfer contracts and any other legal services and advice to complete settlement of the business sale.
Step 7 – legal services after completion of settlement
Once settlement is complete, your appointed business sale lawyer will ensure that any post-settlement obligations are met. This might include ensuring that any outstanding retention amount is paid to our client.