If you’re planning a business purchase or sale, you also need to prepare for the financial, tax, and regulatory issues that may accompany the transaction. Most people are not well-versed in all these elements, so hiring someone with the skills you lack is good business sense. Rather than putting your company and its finances at risk, let a Grand Rapids business law attorney from our law office at SBS Law PLC advise you on what to expect and handle the legal work on your behalf.
When you hire our law firm to help you conduct your business transaction, you’ll get a lawyer who will stand by you throughout the entire process, from drafting the letter of intent through the final closing and wrap-up. You’ll never be left wondering whether you’re doing the right thing or whether you’re missing a legal detail that will come back to haunt you later. Call SBS Law PLC today for a consultation with one of our business law and litigation attorneys in Grand Rapids, and let us provide you with the peace of mind you need.
Business purchases and sales in Grand Rapids, Kalamazoo, or elsewhere in Michigan typically use one of the following transaction types.
You can discuss your goals with an experienced Michigan business lawyer at a reputable law firm, who can explain the different deal structures and which might be most conducive to achieving the results you desire in your circumstances.
Buyers and sellers have different goals, which may affect the type of deal structure they choose. In an asset sale, the buyer acquires specific assets while the seller retains ownership of the business entity. This type of sale allows the buyer some tax advantages, such as depreciation or amortization benefits, but may result in the seller’s higher tax liability due to the carryover basis.
In an equity sale, the buyer assumes all assets and liabilities because they acquire ownership of the business’s shares. While this structure preserves the legal entity and operational continuity, an equity sale can expose the buyer to unknown liabilities.
Sellers usually prefer equity sales for tax efficiency, but buyers may prefer asset sales for tax deductions and risk management.
A letter of intent (LOI) is a non-binding document that outlines the terms and conditions of a proposed agreement between two or more parties. An LOI establishes a framework for future negotiations and paves the way for a successful transaction. The LOI for a Michigan business purchase-and-sale transaction should begin with an introduction that identifies the parties and the purpose of the document.
Next, a description of the transaction and the deal structure to be used, along with the purchase price and payment terms, should be provided. Valuation methodology should also be addressed in this section.
The LOI should include an outline and timeframe for the due diligence process and any related investigations. Confidentiality and exclusivity provisions are usually included in an LOI. The document should also contain a listing of any conditions precedent: those conditions that must be met before the transaction can go forward.
The circumstances under which the LOI can be terminated, and breakup fees can be incurred, should be outlined in the LOI. The amount or nature of the fees or expenses should be detailed.
Finally, the LOI must include an explanation of the process for negotiating the transaction’s final terms.
An experienced attorney from a Michigan business law firm can draft an LOI for you. They will include all the requisite sections and details in the LOI, and they can negotiate on your behalf for the terms that are most favorable to you.
A Michigan business law firm can perform due diligence on your behalf. Their Due Diligence Checklist for a Grand Rapids Business Purchase or Sale will include:
Anyone who purchases a business needs to consider a variety of employee and workforce issues. Having a business lawyer review all your documentation to be sure you’ve covered all the bases is wise. A lawyer can review these factors to determine whether you’ll need to make any changes:
You should involve a Michigan business attorney as soon as you’ve decided you want to purchase or sell a business.
An attorney can:
Perhaps most importantly, a good business purchase and sale transactions lawyer gives you the peace of mind that comes from knowing a professional is handling things for you.
Acquiring or selling a business is a significant milestone in your business life. Don’t try to undertake such a task without the guidance of a lawyer who’s well-versed in business sales and purchases.
At SBS Law PLC, our Grand Rapids business law attorneys handle these complex transactions frequently. We work for small to mid-size businesses throughout the region, and we understand its business environment. Let us put our experience, knowledge, and commitment to delivering results to work for you.
If you’re contemplating buying or selling a business, call our law firm or contact us online today, and one of our experienced transactions attorneys will be happy to speak with you about your matter.
