The Importance Of A Proper Offer In A Business Transaction - VR Business Sales Blog

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Wednesday, November 25, 2020

The Importance Of A Proper Offer In A Business Transaction

If you're buying or selling a business, at some point you're going to have to take the big step of drafting or reviewing an offerto purchaseThis may seem like an intimidating process if you've never been through it before. So now what?

The best advice is to ensure you're being guided by a professionalfull timebusiness broker, and an attorneywho is experienced insuccessfullycompleting business transactions. Yourbusinessbroker will assist you in understanding the deal overall, which is required if you want to ensure the offer works for all parties. That's an important consideration to remember; if the deal doesn't work for both sides then it's not going to happen.The attorneywill be responsible for ensuring that your specific interests are being protected in all legal matters pertaining to the transaction.

A properly constructed offer should cover all of the following: the entities involved, the pricing and deal structure, a deposit if required, conditions, guarantees,contingencies, a list of included assets & equipment, the amount of inventory included in the sale, and deadlines for offer acceptance and closing. Most people focus largely on the pricing aspect of an offer, however terms and conditions are crucial for a successful transition and life after closing. These include such key continuing aspects as seller financing, the training and transition period, an agreement with the owner for post-closing consulting or employment, a non-compete agreement, and a non-solicit agreement.

A professionally drafted offerto purchaseshould also be able to address and answer the question, "What is the blueprint going forward in the event any of these items should come into dispute?" To accomplish that, it must provide enough clarity, as agreed to by both parties, that it will act as a legal framework going forward. A poorly constructed offer leaves out important details, which creates misunderstandings. Misunderstandings lead to disputes, and disputes are expensive to resolveand could turn into litigation.

Do it right the first time by engaging professionals.
Ryan Jorden
Business Broker and Deal-Maker


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