Brandon S. Peters, Esquire
Purchase Process - Part 2
Today, we’ll take a look at three additional components of the business purchase and sale process.
During the Due Diligence/Inspections phase, the buyer has the opportunity to ensure all of the seller’s disclosures are accurately presented in the purchase and sale agreement. Every offer to purchase a business should be contingent upon due diligence and inspections meeting the buyer’s subjective expectations. Thorough due diligence will address multiple aspects of the seller’s business, including financial documents, legal issues, operations, employee relations, as well as all assets, liabilities and customer data. The buyer should inspect real property, vehicles and equipment to ensure they are in the condition represented in the parties’ contract.
There are many ways to finance a business purchase once the buyer and seller negotiate a final price. Financing can be as simple as using the buyer’s own capital to fund the purchase. It can also be more complex, as when a buyer applies for loans from commercial lenders or seeks financing directly from the seller. When raising capital to purchase a business, some buyers will form investment companies or sell stock to company employees.
The final part of the process of purchasing or selling a business is the closing. Traditionally, this occurred with the buyer, seller, their representatives and others having an interest in the transaction sitting at a large table passing around stacks of documents for signatures. In the modern era, most closings are conducted virtually with documents being couriered between the interested parties or signed electronically. Once all of the necessary signatures have been acquired and the agreed payment is received by the seller, the sale is considered “closed.” The closing is the time when the new owner formally assumes the role of business owner and takes control of the purchased assets.
Reach out to us today if you want to purchase or sell a business or if you have been harmed because you negotiated such a deal and found out the hard way that the other party was dishonest.