Buying and Selling Small Businesses

Buying or selling a business is a complex undertaking with important legal considerations. From negotiating a letter of intent to drafting a purchase agreement to conducting due diligence, there is a lot of work to be done.
Blue Maven Law is committed to getting deals done. At its core, the firm’s mission is to help small business owners – and future small business owners – achieve their dreams of buying or selling their business while avoiding potential negative legal consequences.

Following is a sample of services we provide:

  • Assisting with structuring the transaction
  • Drafting and negotiating the letter of intent
  • Conducting legal due diligence (when representing buyers)
  • Assisting with the production of due diligence documents (when representing sellers)
  • Drafting and negotiating appropriate legal documents and
  • Facilitating a smooth and timely closing

One of the most important services we provide is simply being an experienced advisor, making sure our clients understand all aspects of the transaction and ensuring that they are well-informed and comfortable

In short, Blue Maven Law is with our clients, providing hands-on legal advice, every step of the way.

Due Diligence

Due diligence is the process of verifying that the business you’re considering buying is all that it’s represented by the seller to be. I think of due diligence as kicking the tires, like you might do when you’re buying a used car.

When you buy a used car, you don’t just take the seller’s word for it that the car is in good condition—you take it for a test drive, look under the hood, and scrutinize the paint and interior. And smart buyers take the car to a mechanic to put it up on a rack and inspect the car’s undercarriage.

Blue Maven Law is like the mechanic who helps you look under the hood, “kick the tires,” and evaluate the business with a professional eye.

Due diligence services include lien and judgment searches, obtaining a tax clearance certificate, assistance with compliance with bulk sales laws, analyzing stock transfer records, and advice regarding sales tax on the transaction. Depending on the specific circumstances, due diligence services might include much more.

Documentation

Proper documentation is critical in all business acquisitions and sales. The last thing a new business owner needs is a “time bomb” ticking away in their files. Incomplete, incorrect, or inadequate documentation will eventually cause issues for the business and the resulting “explosion” could be devastating.

Every deal — whether it is structured as an asset sale, equity sale, or merger — has a definitive agreement at the core of the legal documentation. In an asset sale, this will be the asset purchase agreement. In an equity sale, it will be the stock purchase agreement (or membership interest purchase agreement in the case of a limited liability company). In a merger, it will be the merger agreement.

Blue Maven Law’s documentation services include drafting and negotiating the appropriate purchase agreement, as well as ancillary agreements, such as a bill of sale, trademark assignment, stock powers, corporate resolutions approving the sale, officer’s certificates, and the numerous other documents that are often required to transfer ownership of a business.

Limited Representation

One situation in which Blue Maven Law provides limited representation is when a business broker is involved in the deal, and the business broker has a relationship with a law firm that acts as a “neutral” attorney to document the transaction.

Business brokers often assist business owners with selling their small business. Good brokers are seasoned professionals who are good at connecting their client with a qualified buyer and facilitating a smooth transfer of the business.

Business brokers work with a neutral attorney, the attorney prepares the documentation required to transfer ownership of the business from the seller to the buyer. The attorney is “neutral” in that he or she does not advise the buyer or seller on the merits of the deal; the attorney’s job is just to make sure the sale is documented properly.

What is missing is a professional who is looking out for the interests of the buyer. Blue Maven Law fills that need by offering limited representation service, which include review of the purchase agreement produced by the broker or its neutral attorney, and a memorandum containing comments and advice based on the review. The last step is a call (typically 30 minutes) with the client to ensure that all details are understood.