Important Things to Consider When Making a Business Purchase or Sale

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Important Things to Consider When Making a Business Purchase or Sale

Businesses go through a lot of changes within a short span of time. Even a six-month-old start-up could be looking at expansion, owing to unexpected a

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Businesses go through a lot of changes within a short span of time. Even a six-month-old start-up could be looking at expansion, owing to unexpected and speedy profits.

However, many business owners enter contracts on their own, but this is when you should hire corporate lawyers Alberta. Attorneys are experienced in dealing with these processes and can help you understand many legal issues.

But before entering a transaction, you need to consider some aspects, such as:

Lawyer’s Experience
Whether you hire a transaction team or a single lawyer, they should have adequate experience. The lawyer could preferably be an M&A lawyer, and the team could also consist of an accountant.

Either way, retaining them proactively, i.e., before both parties enter into negotiations, is ideal. This way, you can get due diligence done about the client, make budget assessments, and review the entire transaction-associated fees. Also, based on whether it is a public company, additional legal and financial documentation may be required.

Check the credentials of the lawyers and accountants. Some legal advisors claim to be generalists but have only a few years of expertise in business transactions. So, there is a chance that the advice you receive can become a hindrance and lead to higher legal costs or overall losses.

Transaction Structure

Your corporate lawyers Alberta will advise you on the best possible way to draft the transaction. Different transaction structures have different advantages, tax considerations, and liability issues.

For instance, if the transaction is by way of assets, the buyer assumes more liability than via business share purchase. This is because, in the purchase of assets, you buy specific assets or the business in its entirety.

But with share purchase, there are no exclusions; you buy the business as a whole. As you can see, asset purchase can be more beneficial when you are buying and share purchase is preferable when selling.

Risk Mitigation

Your transaction team has to identify potential risks and liabilities and find ways to mitigate them while maximizing your profits. It is vital to detect risks like unpaid business taxes, outstanding fees on the property, liens, human rights complaints, legal judgments, pending lawsuits, etc.

Typically, your M & A lawyer will advise you on:
• Negotiating preliminary agreements like the letter of intent, NDA, initial term sheet before carrying out due diligence
• Conducting legal evaluation, title review, lease agreement review, and more
• Identifying potential issues and legal risks and explaining how to mitigate them
• Drafting the most advantageous structure of the transaction and negotiating the final agreement, including:
• Payment methods
• Warranties or indemnities
• Non-compete clauses
• Retention and transition of employees

Finally, they ensure all the necessary legal steps are taken to complete the transaction. They facilitate seamless transactions from vendors to buyers and commercial financing opportunities.

As you can see, there are crucial considerations to be made before you dive head-first into business transactions. Do your due diligence, review all paperwork, and find the best possible deal for the business. But most importantly, choose a reputable acquisitions attorney to handle all corporate matters.

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