Business Lawyer in B.C. for Buying or
Selling a Business
Corporate transactions involving the sale and purchase of an existing business come with numerous complex legal considerations and requirements that must be carefully reviewed and addressed. We are here to help you from negotiating the terms to drafting the necessary documents and ultimately closing the deal.
We would be happy to help you if:
You are an owner of a B.C. company who is selling his/her business
You are looking to purchase an existing B.C. company
Steps in a Business Buy/Sell Transaction
Keep us in your corner.
The first step in a business deal is to negotiate with the other party and determine how to structure the purchase/sale. We can help you decide whether it’s better to sell your business’s assets or to sell your business’s shares if you’re incorporated. The best choice depends on your unique situation, your goals for exiting the business, and the tax implications of each option.
During this initial step, it is important to seek the advice of other professionals such as accountants and valuators.
Once the main terms have been agreed upon, the next step is for the parties to enter into a Letter of Intent (LOI). An LOI is a document that outlines the preliminary terms and conditions agreed upon by parties involved in a potential business transaction.
The next step is drafting the Asset Purchase Agreement or Share Purchase Agreement. This is the main agreement in the deal. We highly recommend seeking legal advice to ensure that every clause is in your best interest, that every term is clear and enforceable, and that the agreement will protect you from being blindsided later on.
At this point, the lawyers on each side will conduct necessary due diligence, draft any missing corporate documents, reorganize the company if needed, obtain consents if needed, and prepare all necessary ancillary documents.
By the closing date, all parties should feel comfortable with all aspects of the deal. The shares/assets and funds will be transferred on the closing date with the help of your lawyer.
Purchasing an existing business comes with several advantages. You’re more likely to succeed with a business that’s already up and running, rather than starting from scratch. It also reduces startup time, as the business may already have trained staff, established relationships, a loyal customer base, and well-developed company policies.
Moreover, there is more likely to be consistent income as you can review the business’s financial history. Finally, with a proven track record, securing financing is often much easier.
Besides the main terms such as the agreed upon purchase price, the LOI should also include confidentiality clauses and rights to inspect both the physical assets and the business’s books and records. The confidentiality clause ensures that the buyer does not misuse any business information if the deal doesn’t go through.
Additionally, most buyers will require the LOI to include a provision restricting the ability to sell the business to another party for a specified period of time.
Due diligence is a comprehensive review of the business which involves analyzing financial statements, operations, and contracts to essentially ensure that the purchaser is not getting to a bad deal. The lawyers will also review the corporate records for deficiencies and conduct searches to reveal potential issues such as personal property liens or lawsuits.
It depends on the size and complexity of the transaction. That being said, it could be done in as little as 1 month with the help of an efficient lawyer.
To get ready for the sale, you should prepare the following items:
- Financial statements from the past two to three years
- Tax returns from the past two to three years
- A list of inventory items and equipment with their values
- A list of existing contracts, such as commercial leases and employment agreements
- A list of outstanding debts and liabilities
