Buying or Selling a Business in Arkansas

Posted: April 16, 2023

The purchase or sale of a business is a complex transaction that involves numerous legal documents and considerations. Whether you're a seasoned entrepreneur or a first-time investor, navigating business transactions smoothly requires the assistance of professional advisors. Our experienced M&A attorneys are here to help you navigate the legal process and avoid unnecessary disputes so you can 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, three types of advisors are typically involved:

• Legal Counsel – Your attorneys will assist you with structuring the transaction, negotiations over legal terms, drafting contracts, the due diligence process, and the closing. Legal counsel will ultimately assist in getting the deal from LOI to closing.

• Accountant – Your accountant or CPA typically assists with 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 consult with you to make sure there are no hidden tax issues.

• 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). The purchase agreement is a critical document for a variety of reasons, but perhaps most importantly it will allocate liabilities between the buyer and seller.

• Post Closing Employment Agreements and Non-Compete Agreements – Often a buyer desires for the seller to retain a temporary role with the business after the closing to assist with transitional matters. This relationship is often governed by an employment agreement. 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.

For a Successful Transaction, Consult an Experienced M&A Attorney

The guidance of a skilled mergers and acquisitions attorney is invaluable throughout the buying or selling process. An attorney can safeguard your financial interests and ensure a legally sound transaction.

Contact our law firm today to schedule a consultation and discuss your business transaction needs.