Selling a business in Florida, like a lot of an entrepreneur’s life, involves drafting and signing a lot of paperwork. Unfortunately, far too many business owners rush through these transactions. They don’t take the time to read and understand just what it is that they are agreeing to. Speeding through things increases the chance that a deal-breaking disagreement between the buyer and the seller. Below we have included five of the most common and most important documents involved in selling a business in Florida.
At its most basic, an engagement letter lays out the specifics of the working relationship between a seller and the advisor that they choose to help them with selling a business in Florida. This allows each party to have a clear understanding of their responsibilities. At a minimum, the engagement letter should cover the following:
“The teaser” is perhaps the most critical document for selling a business in Florida. It’s important enough to have professionally drafted. Basically, a teaser is a document that outlines the investment opportunity for potential buyers. It is sent out “blind” – that is to say, without any information that could identify the company.
The idea behind a teaser for selling a business in Florida is similar to teaser trailers for movies; you want to provide something that excites and entices would-be buyers. However, that doesn’t mean that you should make your company seem more appealing than it really is. Quality teasers offer a comprehensive, honest overview of the business and the objectives of the sale so that everyone stays on the same page.
Non-Disclosure Agreements, or NDAs, are another agreement that you might have come across before. At the very least, you’ve probably heard them mentioned in passing. When selling a business in Florida, NDAs serve the purpose of securing confidential business secrets, trade secrets, and other sensitive information between the buyer and the seller. Parties share many otherwise confidential documents when selling a business in Florida. You want to make sure that a would-be buyer won’t just use this as an opportunity to make off with your trade secrets, such as recipes or even your lists of past clients and vendors.
A properly-composed NDA explains the duration of the agreement, what is classified as confidential information, as well as what is to be done with that information upon termination of the agreement. Once a buyer signs an NDA, then it will be time for a confidential information memorandum – CIM for short – to be presented to them. The CIM contains insider information that will help give them a better understanding of the company so that they can decide if they want to move forward with the purchase.
Finally – a document that you won’t have to draft yourself as the seller! A letter of intent (LOI) is what the buyer will deliver to the seller after further reviewing the company up for sale if they like what they find. This is where the buyer will first propose the structure and terms that will govern the deal. It’s a good indication that the buyer is serious about making an offer, too. The specifics depend on the nature of the deal but usually entail the deal’s structure, the consideration, the desired timeframe, closing conditions, and requirements for due diligence. Much like the teaser you drafted earlier, a letter of intent facilitates understanding between the buyer and the seller.
It’s time for the purchase agreement. At this stage, you will almost certainly want the help of an experienced local attorney. Purchase agreements are important and binding, and you would do well to have the assistance of someone familiar with business law. It’s the end result of all the offers, terms, and other items that you’ve been negotiating over so far. Like all contracts, each and every purchase agreement should be tailor-made for a given transaction or deal. Your lawyer can help with this and many other aspects of selling a business in Florida.
Looking to start a business or grow your current business? Contact FL Patel Law today by visiting our website or calling (727) 279-5037.