Buying and Selling a Business
Business Sales and Acquisitions in Oregon and Other States
Small businesses and closely held corporations have a way of changing their size and shape over time. Years of success at the original scale of operations make it natural to consider the purchase of related businesses in order to expand into new markets. The same success can make the company attractive for sale to a larger buyer or investor.
If you need advice about the practical and legal aspects of the purchase, sale or merger of business entities or assets, contact Hunt & Associates in Portland to discuss your transaction with an experienced lawyer
From the Initial Confidentiality Agreement to Final Documentation and Closing
Our attorneys offer comprehensive client service on either side of business purchase or sales agreements. Once the principals agree to explore the possibility of the sale or acquisition, the usual first step is to execute an initial confidentiality agreement that protects each party through the exchange of information in the early stages of the transaction.
The contours of the sale or acquisition take shape once each side has a chance to define such terms as price, scope, financing, management retention, noncompetition and other details. Our attorneys can define these terms on a preliminary basis in a negotiated letter of intent and then prepare, review and finalize all of the documents necessary to complete the acquisition or sale of the business.
We Can Represent Either the Buyer or the Seller in Business Acquisitions
From the buyer’s standpoint, it’s necessary to perform due diligence in the valuation of business assets, the existing management team’s performance, the assumption of current contracts and commitments, market analysis, and potential liabilities and litigation risks. When acquiring a business several questions need to be answered including, but not limited to:
- Will you continue to operate the business at its current location?
- Will you need to retain or replace senior or mid-level managers and other employees?
- Will you need to replace equipment, vehicles or inventory?
- Is there a history of employment, or other, litigation?
- Are there environmental issues at a warehouse or factory?
- What type of relationship do the sellers want to maintain with the business?
A seller’s primary interest will involve the buyer’s willingness and ability to pay the desired price. In addition to setting a purchase price and determining a buyer’s ability to pay the desired purchase price, the seller will need to ask a number of questions, including:
- Will this be a cash deal or financed?
- Will the deal be seller financed such that the seller can expect to receive payments over time from the buyer?
- If the deal is seller financed, what security will the seller accept to ensure that the buyer makes its installment payments?
- Will the seller be able to open a competing business in the future?
- Will the seller retain employment with the business following the sale of the business
- Does the seller want to ensure that employment agreements for family members and key employees are included in the sale, such that the family members and key employees cannot be terminated immediately following the sale?
The seller also needs to be ready to respond to questions about valuations, litigation, regulatory risks, or any other matter that the buyer needs more information about after a period of kicking the tires.
Other important aspects of the purchase or sale of a business include tax considerations for structuring payment, indemnification terms related to current litigation risk, the assignability of key employment contracts and noncompetition agreements, and estate planning issues, especially if the sale is related to the owner’s retirement.