Choose and document the transaction structure
An asset acquisition and a purchase of ownership interests can produce different consequences for transferred assets, assumed liabilities, contracts, permits, taxes, employees, and closing documents. Legal and tax advisors should coordinate early, before a term sheet hardens assumptions that are expensive to change.
The letter of intent may address exclusivity, confidentiality, access to information, proposed structure, financing, deposit treatment, and which terms are binding. It should not leave the parties uncertain about whether they already made an enforceable commitment.
Review the operating foundation
Diligence may cover organizational records, capitalization, financial statements, tax material, debt, liens, contracts, leases, litigation, licenses, intellectual property, employment matters, insurance, privacy obligations, customer and vendor relationships, and ownership of key assets. The right scope depends on the business and transaction.
A buyer should verify rather than merely collect. Missing signatures, expired licenses, assignability restrictions, change-of-control clauses, undocumented owner loans, and assets held by affiliates can affect value and closing. A seller benefits from identifying and organizing these issues before marketing the company.
Allocate risk in the definitive agreement
Representations, covenants, closing conditions, indemnification, escrow, restrictive covenants, transition assistance, working-capital adjustments, and payment protections should reflect verified information and negotiated economics. Disclosure schedules are part of the agreement, not an administrative afterthought.
Closing should include the documents and third-party consents needed to transfer control and operate on day one. Review business transaction services from The Law Office of Craig A. Fine, P.C. This legal topic does not constitute financing, valuation, accounting, or merchant-services advice.
About Craig A. Fine, Esq.
Craig A. Fine, Esq. is the founder and managing attorney of The Law Office of Craig A. Fine, P.C. in Staten Island. Browse the Craig A. Fine legal archive, The Fine Line Blog, LinkedIn, Facebook, and X.
General information only; not legal, tax, accounting, financial, or investment advice and not an attorney-client relationship. Attorney advertising.
Craig A. Fine, Esq.
Attorney and founder of The Law Office of Craig A. Fine, P.C., licensed in New York, New Jersey and Florida. Contributor covering residential and commercial real estate, business law, contracts, landlord-tenant matters, litigation, wills, trusts and estate planning.
