Growing a business into a going concern can take years. Yet the strategies, relationships and the legal contracts that were critical to developing the business can turn into skeletons in the closet when it comes time to sell.
The gap in differing views between buyers and sellers is interesting. Yes, there is the sale price and value an owner thinks the company is worth, and there is the final sale price. There are also features that sellers think are a priority during the sale process, but buyers don’t. Sellers think their product or services are the highlight of the business overview, for example, yet it is the legal areas that are often the first area to be explored by the buyer’s team at the start of the due diligence process.
Each company is a unique situation. However, owners can gain a general understanding of the critical legal issues that will, at the least, lower the selling price or, worst of all, cripple and end the sale of a business:
1. Fuzzy ownership of intellectual properties can be a sinkhole. IP legal contracts apply to the work created by internal employees, but don’t forget to include the external and independent consultants’ work.
Read more from Globe and Mail