Here is part 8 of our 10 do's and don'ts of business selling. We gained these insights from hard-won experience and observing what can happen in the business selling market!
8. DON’T – Agree to onerous conditions you can't meet or which put you at undue risk
Do – Ensure the terms and conditions are commercially and legally sound
Inevitably in a business sale process the purchaser will come forward with a whole range of terms and conditions to protect their risk prior to, and following, the sale.
These may relate to:
- warranties and claims on workmanship, prior to sale completion, for work performed;
- restraint of trade, which restrains you from being involved in the activity of the business for a period of time;
- retaining key employees in the business for a period of time;
- maintaining certain contracts in the business post-completion.
It’s right to have your eye on the end point, which is a completed sale, and you shouldn’t lose sight of that.
However, you also need to ensure the conditions and terms of the sale are not overly onerous and/or difficult for you to meet, because if they are it will mean an unravelling of the value.
Make sure the terms you agree to are commercially and legally sound and get advice from your business advisor, broker and/or solicitor throughout this process.
If you would like advice or support to sell your business, contact the experienced team at JPAbusiness for a confidential, obligation-free discussion.
From the JPAbusiness archives, refreshed and checked for accuracy January 2017.
James Price has over 30 years' experience in providing strategic, commercial and financial advice to Australian and international business clients. James' blogs provide business advice for aspiring and current small to mid-sized business owners, operators and managers.