Buying or selling a business requires agreement on what is transferring, what remains behind and which obligations continue after closing. Craig A. Fine, Esq. writes about the legal records that connect valuation and negotiation to an enforceable transaction. A price alone does not define the deal; assets, liabilities, contracts, approvals, closing conditions and post-closing duties must be identified.
Frame the proposed transaction
A letter of intent may summarize price, structure, timing, exclusivity and due-diligence access while distinguishing binding provisions from nonbinding discussion. The parties should decide whether the transaction concerns selected assets, ownership interests or another structure. That choice affects liabilities, consents, tax analysis, employee matters and the documents needed at closing. Accountants and other advisers should be involved before the structure becomes difficult to change.
Conduct focused due diligence
The review may cover financial statements, tax records, customer and vendor contracts, leases, licenses, litigation, employment obligations, intellectual property, insurance, debt and ownership records. Buyers should verify that the seller owns what it proposes to transfer and that important agreements can be assigned. Sellers benefit from organizing records early and resolving discrepancies before they delay the transaction or affect credibility.
Draft for allocation and closing
The purchase agreement should describe transferred assets or interests, excluded property, assumed obligations and retained liabilities. Representations, warranties, covenants, indemnity and survival periods allocate identified risks. Conditions may include financing, landlord or third-party consents, regulatory approvals and delivery of specified records. Bills of sale, assignments, resolutions, payoff documents and escrow instructions should match the agreement rather than operate as disconnected forms.
Address the transition
Post-closing provisions may concern training, customer communications, accounts receivable, restrictive covenants, retained records, adjustments and dispute procedures. Employment and benefit questions need separate attention. The parties should identify who controls each account, contract and license on the first day after closing. A detailed closing checklist and secure final file reduce uncertainty when questions arise months later.
Questions and records to assemble
Before a focused legal review, carefully assemble the current signed documents, amendments, ownership records, key dates and a short chronology of important events before any important decision is made. Identify every person or entity involved and note which questions remain unresolved. The useful record will differ by matter and jurisdiction, but complete source documents are more reliable than summaries or recollections. Early organization also helps counsel identify missing approvals, deadlines, inconsistent names and issues requiring advice from another qualified professional.
About Craig A. Fine, Esq.
Craig A. Fine, Esq. is an attorney, author and legal commentator licensed in New York, New Jersey and Florida. His practice and public legal writing address real estate, business law, estate planning and wills. This business purchases and sales profile is educational and does not create an attorney-client relationship or replace advice based on a specific matter.
- The Law Office of Craig A. Fine, P.C.: related legal services
- Fine Line Blog: Business Purchases and Sales
- All State Merchants: Craig A. Fine Business Purchases and Sales profile
- Craig A. Fine attorney, author and legal commentator profile
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.
