What We Can Do To Help You Sell Your Business:
Bill Price has a fairly large Rolodex of Illinois business contacts, developed since starting with Chicagoland chamber of commerce work in 1978. He has contacts in, or can probably find, people in a wide variety of potential strategic buyers, p/e firms that may invest in your type of company, lawyers, accountants, valuation persons, bankers, and others that may be useful to you in your search for a buyer. As a member of the Midwest Business Brokers and Intermediaries, he also has access to a wide network of qualified business brokers with decades of experience in helping companies like yours develop websites, company profiles, and campaigns to help you get as high a price as possible for sale.
Cash at closing is the primary qualification, and that is usually a primary problem for the buyer’s bank or other finance source, not you as seller. Still, if the person coming to you with an offer has a bad litigation track record, bad personal credit, a criminal history, or no experience in your industry, you may not want to stop dealing with other people until he or she makes up their mind about and does “due diligence” on your deal. This qualification is something your lawyer, accountant, and banker can help with.
Financing For Possible Buyers
Almost all deals involve some seller “earn-out” terms, so buyers can afford to pay you as high a price as possible, but also so they can verify in experience that your company will continue to produce profits like it did before closing. The same earn-out can be used as a down payment for loans to buyers, to make the deal even more affordable. If your company sale is likely to be to someone who is purchasing it to “buy a job”, then you can considerably facilitate the process by working with your bank or other financing sources to check what terms they could give qualified buyers if a purchase agreement is negotiated. In other words, pre-negotiate your earn out, deal financing, and your expected purchase price, subject only to proof a buyer is credit worthy. You can use an experienced business lawyer to help identify potential funding sources.
Negotiating Deal Terms
Business purchase transactions are, in some ways, like the exotic dancer Sally Rand’s act, back at the beginning of the 20th century: you start with a lot of veils and mystery, and as you sign more agreements, you take the effort to disclose more of the information essential to the buyer and their financing source’s determination whether your sale to them is likely to make money. The legal documents often involved in such deals include:
a. A noncompete/nondisclosure form, so both sides can talk without worrying that whatever they turn over will immediately be disclosed to competitors, the public, or other third parties who could harm either party’s future business prospects. With this, the buyer usually gets a reasonable entity “disclosure book”, containing management’s general discussion of the business, the last few years of tax returns, and other paper for analysis of the deal. Your lawyer is needed to help negotiate the NDA, to coordinate disclosure (often hosting the “deal room” documents of disclosure in a secure online site), and to keep the parties in contact during initial meetings.
b. A term sheet, or “Letter of Intent”, with a non-binding set of terms that outline what the parties expect their eventual deal to be, and usually a binding part where the seller agrees to take the target company off the market for 60 days or so so the buyers can complete their “due diligence” examination to verify all the information in the initial disclosures, additional financials, and other relevant data, like liabilities and tax payment status. Your lawyer and other advisers (like your accountant) are needed to help negotiate the LOI and help with official sources, etc… for the due diligence phase. Bill Price has been on both sides of the table on many deals, and can help you find the right questions, negotiate reasonable terms of purchase (like reasonable multiples of profits for the purchase price), and help coordiate production of verification data for your deal.
c. Closing Documents: These include financials up to date as of closing, a final purchase agreement (for all the target’s stock, or all relevant assets with no past liabilities), bills of sale and title transfers, government license transfers, etc… If a bank loan is involved, then those agreements, disclosures, and other items needed to drag cash out of the relevant institution all need to be analyzed for correctness, proofread, and signed at closing. There may be other disclosures (e.g. environmental, if a site is in question that might have issues) to draft and negotiate. For all these, you can either use an experienced business lawyer or try someone whose experience is in yelling at people (litigation), dirt (real property law, not companies), or whatever – maybe yourself. If so, good luck. If not, call us.
d. Post-closing arguments: Buyer’s accountants before the closing and afterwards often disagree, and if the buyer doesn’t make the money they hoped to afterwards, there are often claims, arbitration, and litigation attempts for sellers to deal with, as buyers attempt to claw back some or all of what they paid. Transactional lawyers do not love this litigation, since it means that the parties have been unreasonable despite their best efforts at checking out a deal. They can and do help with it, however, and you save a lot of time using the lawyer who did the deal to enforce same. Bill Price has claimed and defended, usually in a way that lets the parties resolve things efficiently.
Call or email us if your group needs problem identification, management, or solutions. Tel. 1-800-630-4780, email firstname.lastname@example.org.