You've decided it might be time to sell your business.
Now, the real hard work starts.
So, what should you do first?
Neil Balmert, an attorney with DLA Piper,
gives us a to-do list for pre-sale planning.
Well, thanks, Leo.
Well, a business owner should really run a tight ship,
I would say, financially and legally.
Even from the start-up of the company,
you want to make sure that the intellectual property
is properly owned by the company.
It has non-disclosure agreements with its employees.
The books and records are properly run.
And I would say, maybe most importantly,
the accounting function is properly run,
with proper financial statements and such.
Neil, what are some of the pitfalls
you've seen in this process?
One is founders tend to be very smart people,
and they're very smart in their field,
which tends to be
maybe technology or something like that,
but they're not necessarily great managers.
So, one thing investors bring to the table,
venture capital investors,
is forcing the company to run the company
better from a managerial standpoint.
But oftentimes, founders are reluctant
to kind of give up the control of the business,
and that's always a tension because it's their baby.
They got it where they want it.
They don't want to give up control,
even though financially and for growth
perspectives, that's the right thing to do.
What are some key deal points in the sale agreements
that you think are often overlooked?
The important thing I would say
because oftentimes the clients do that themselves
and hand the signed
letter of intent to the lawyer,
and they've missed the five most important
things you want to see in a letter of intent
because they didn't know to ask for it.
So, that's the most important takeaway, I would say.
And then secondly, the agreement itself,
So, price is important,
but indemnification means the right of the buyer
to claw back on some of the
purchase price post closing.
Neal, thanks so much for your time and expertise.
If you have questions about
what's best for your business, give us a call.
We know your time is precious. Let's make it count.