With SELLING continuing to be a hot topic, we’ve got some good advice that you may not have considered. The legal aspects of selling a business are often unchartered territory for many owners. That’s why I brought in Terri Krivosha, a strategic business attorney from Maslon, LLP, to enlighten you on four key legal considerations when selling your business.
Even the most profitable businesses owners can suffer if they don’t enter a deal with their eyes wide open. Terri’s advice? Prepare ahead of time to avoid costly, unexpected obstacles and reduce the stress of selling.
4 Legal Considerations for Selling Your Business
- 1. Be ready to sign a non-compete. Most buyers don’t want you hanging around after completing the deal. They simply want to sign the documents, shake hands, and go their separate way.
Don’t take it personally if/when a buyer asks you to sign a non-compete. They’re simply taking the necessary precautions to protect themselves moving forward.
- 2. Understand continuing risk. You still maintain a certain amount of liability even after selling your business. The exact nature and longevity of those risks depends on the specifics of your arrangement with your buyer.
To minimize your risk, practice full disclosure with your buyer. Hire an experienced lawyer to help you ensure you’re disclosing all relevant information to protect the buyer to the best of your ability.
- 3. Don’t become overly reliant on family experts. Terri said many longstanding family business have well-established allegiances to certain consultants, be it lawyers or financial advisors.
However, loyalty doesn’t necessarily make them the best resource to guide you through the selling process. With so many nuances and intricacies, it’s better to find an expert who is familiar with the territory.
- 4. Protect your intellectual property. Arriving at the negotiation table only to find that your company has violated a trademark or copyright can set back or dismantle a business deal entirely.
Review that all of your intellectual property is legally protected. This includes ensuring all your employees have signed confidentiality agreements and non-disclosures.
Like it or not, there are several legal aspects to consider when selling your business. The best way to avoid unnecessary and costly complications is to cover your bases well ahead of time.