Buying or Selling a Business in Arkansas
The purchase or sale of a business is a complex transaction that involves numerous legal documents and considerations. It is important to have experienced attorneys to help you navigate the legal process to avoid unnecessary disputes and obtain maximum value from the transaction.
The mergers and acquisitions lawyers at McDaniel Wolff regularly represent clients both on the buyer’s side and on the seller’s side of business transactions. We have extensive experience in negotiating, drafting and closing asset-based transactions, stock-based transactions, and other complex deal-structures such as tax-deferred rollovers, mergers and corporate spin-offs.
If we can assist you with the purchase or sale of a business in Arkansas or elsewhere, please call or email one of our M&A attorneys featured on this page, or submit an inquiry via our contact form available here.
What are some initial steps that should be taken prior to purchasing or selling a business?
One of the first steps in buying or selling a business is to retain the right advisors to assist you with the process. With the sale of a business, it's important to have three main advisors involved:
- Legal Counsel – Your attorneys will assist you with the deal structuring, negotiations, drafting documents, the due diligence process, and mitigate any potential risks the transaction may possess. Sound legal counsel will ultimately assist in getting the deal to closing and ensure the seller gets paid.
- Accountant – Your accountant or CPA will focus on the tax and financial aspects of the transaction. Transactional CPAs can assist with the preparation of financial statements for presentation to a potential buyer and the financial due diligence process. They can also weigh in to make sure there are no hidden tax issues with the deal structure.
- Investment Bankers / Business Brokers – If you are unable to locate buyer on your own, a broker can assist in finding one. Brokers can also provide significant value by assisting with the determination of your business’s fair market value and getting the transaction to closing by using their experience in negotiating key deal points.
What are some of the key legal documents needed for the sale of a business?
Depending on the nature of the business and the complexity of the proposed transaction, the number of legal documents required may be many or just a few. Some of the legal documents common to most transactions include:
- Confidentiality Agreement – A confidentiality agreement, also known as a non-disclosure agreement (or NDA for short), is a legally binding contract that protects the confidential information of the seller. The buyer agrees not to disclose any confidential information to third parties (or improperly use such information) without the seller's permission. The presence of this agreement facilitates an open exchange of information between the seller and buyer so that deal terms can be negotiated.
- Letter of Intent (LOI) – Once primary transaction terms are tentatively agreed upon, the parties typically enter into an LOI. An LOI is a non-binding document that outlines the basic terms of the sale, such as the purchase price, the closing date, and the terms of financing (if any). Although it typically cannot be enforced in court, an LOI serves to document the parties’ common understanding of high-level deal terms prior to incurring significant transaction costs.
- Purchase Agreement – The purchase agreement is the primary, legally binding contract that sets forth the terms of the sale in detail. The purchase agreement is a highly negotiated document that should always be prepared by experienced M&A counsel. Depending on the type of sale, a purchase agreement can be drafted to reflect a sale of business assets (an Asset Purchase Agreement) or the sale of business equity (in the case of a corporation a Stock Purchase Agreement, or with an LLC, a Membership Interest Purchase Agreement).
- Non-Compete Agreements – A non-compete agreement is a legally binding contract that prevents the seller from competing with the buyer in the same industry for a specified period of time after the closing. These agreements are commonly signed at the closing of a transaction.
If we can assist you with selling a business in Arkansas, please call or email one of our M&A attorneys featured on this page, or submit an inquiry via our contact form available here.