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Business Buying And Selling Agreements In Los Angeles, California
When buying or selling a business in California, it’s crucial to address several factors at the earliest stages of the transaction. Regardless of whether you’re the buyer or seller, solid advice and counsel are necessary to help you identify your goals, determine the appropriate structure, negotiate a deal, and draft the necessary contracts.
At EJP Law, P.C., our Los Angeles business purchase and sale lawyer can provide the legal support you need throughout the process and guide you every step of the way. No matter if you’re looking to buy a business in West Hollywood or sell your business in Los Angeles, we can help. To start working towards your goals, we can arrange a meeting to talk about your situation and come up with a plan. Contact our office now for a consultation to learn more.
The Process Of Buying Or Selling A Business In California
The process of buying or selling a business in California can be quite complicated. Even though the exact steps to be taken during the sale process may vary according to the situation, there are certain essential steps that must be followed. These common steps generally include the following:
Business Valuation
Before advertising a business for sale or making an offer, it is important for both parties to get an independent valuation of the business. This will assist the seller in determining a suitable price for the business and will provide the buyer with a foundation for negotiating.
Preliminary Negotiations
Buyers and sellers engage in initial negotiations before finalizing the sale of a business. This process includes determining the price, transaction structure, and any sale preconditions. This is a critical step in the process and one in which a business purchase and sale attorney in Los Angeles is especially valuable.
Due Diligence
The buyer must perform due diligence to ensure that the business is commercially valuable and viable. This involves a thorough examination of the business’s financial records and other commercial documents typically conducted by a business lawyer.
Drafting Necessary Paperwork
Buying or selling a business requires a significant amount of paperwork, including multiple legally binding documents, such as:
- Letters of intent
- Purchase agreements
- Bills of sale
- Assignment of leases
- Security agreements
- Nondisclosure or confidentiality agreements
- Non-compete agreements
Pre-Closing Review
Before closing, all parties conduct a review to ensure that all necessary steps have been taken, which includes obtaining required consents and approvals, such as those form landlords, supplies, governmental entities, or financial institutions.
Closing
Normally, the sale is considered complete once the buyer pays the agreed-upon amount and the seller provides all necessary paperwork to legally transfer the business ownership.
Legal Considerations When Selling A Business In California
When selling a business in California, it’s important to be informed about potential legal problems that might occur. Some of the most common issues are related to the following three situations.
- Confidentiality Agreement – Before granting access to the business’ financial and other records during the due diligence process, it is important to ask the buyer to sign a confidentiality agreement. This will ensure that the information shared remains protected.
- Indemnification – The buyer might request that you take responsibility for any claims that arise from an event prior to the sale’s completion by indemnifying the seller.
- Continued Employment – In many cases, buyers may request that the seller remains involved with the business for a period of time following the sale to aid in the transition. It’s important to establish the details of this arrangement in the sales contract.
Legal Considerations When Buying A Business In California
When looking to buy a business, it’s important to be aware of legal considerations. These typically involve one or more of the following matters.
- Non-Compete Agreement – Consider asking the seller to sign a non-compete agreement to avoid them from opening a competing business right away.
- Business Assets – To ensure that the assets of a business are included in a sale, the purchase agreement must explicitly list them.
- Due Diligence – It’s important to have a qualified Los Angeles business purchase and sale lawyer carry out due diligence, as it is a complex and potentially lengthy process to ensure that no important information is missed.
Frequently Asked Questions
What’s My Business Worth?
It is important for both the seller and the buyer to get an independent business valuation before making a deal. Although you can make some rough calculations on your own, it is recommended to consult a professional business appraiser for a thorough valuation. There are various ways to approach business valuation, making it a complex process that considers numerous factors and operations of the business. Some of these valuations factors include:
- Business assets
- Future earnings
- Capitalization
- Book value
- Other financial metrics
- Business debts and liabilities
How Can A Business Lawyer Help When Buying Or Seling A Business?
If you’re buying or selling a business in California, it can be helpful to have an experienced business lawyer on your side. They can assist with any legal matters that come up during the transaction, such as representing you in negotiations and ensuring all documents are legally binding. One of the most important things a Los Angeles business purchase and sale lawyer can do is conduct due diligence to prevent future conflicts related to the sale.
Should A Buyout Price Be Determined At A Company’s Inception?
if owners want to have a pre-determined business valuation included in the formation documents, they should consider that the value of the business may increase over time, especially if it’s doing well. Setting a fixed buyout price early on might not be equitable for an owner who decides to leave after the company has performed exceptionally well. Our business purchase and sale lawyer in Los Angeles, California can help with this issue by including a clause in the agreement that requires regular reevaluations of the business’s value before any buyout. There are also alternative methods to determine the value of a business before a buyout.
Contact Our Los Angeles Business Purchase And Sale Lawyer Today
If you are thinking of buying or selling a business in California, EJP Law, P.C. can offer legal assistance to help you through the process. Our Los Angeles business purchase and sale lawyer can assist you during the transaction and guide you through post-transaction steps. With our support, you can be sure that you have thoroughly examined all legal and financial matters involved in the purchase or sale of a business. With offices in Beverly Hills and West Hollywood, we have worked with countless business owners in Los Angeles County to achieve their business goals. Contact our office today at (424) 421-5114 for a consultation and to learn more about how we can help.