20 BWD | Spring/Summer 2015
By Mike Bozimowski, JD, MST, CMI
Critical aspects
of selling
your business
Selling a business is a complex process with many different
stakeholders and parties involved. While it will be necessary
for you to consult legal support directly, reviewing the following
terms will help provide you with an introductory understanding
of important elements involved in the transition process.
Confidentiality agreement
or non-disclosure agreement
Ensuring that the parties involved in a prospective sale sign
confidentiality or non-disclosure agreements (NDA) will help safeguard
valuable information such as client lists, financial details and trade secrets.
If the deal falls through, this information will be kept confidential and all
important documentation will be returned to the appropriate parties.
Letter of intent
The letter of intent (LOI) is a non-binding offer from the prospective
buyer outlining the general terms of the transaction, which include:
•
•
•
•
The structure of the transaction
The total purchase price
The closing date
Other matters, such as each party’s percentage of interest
Smaller, more specific details are usually discussed later in the selling
process. The purpose of the LOI is to allow both the buyer and seller to
reach an agreement on the important deal points. Conversely, it can also
quickly bring to light any major areas of disagreement.
Non-compete agreement
As part of the transaction, the buyer will likely want to have a noncompete agreement in place. In almost all states, non-competition
agreements signed in connection with the sale of a business are
enforceable and can last up to five years.
The seller will likely try to narrow the non-compete agreement as much
as possible.
Employment agreement
In certain transactions, the buyer will want the seller to stay on for a
transitional period, and in