Advice From An Experienced Oakland Business Attorney
Experienced entrepreneurs know that it can be better to purchase an established business instead of starting one from the ground up. The San Francisco Bay Area’s strong economy also makes metropolitan areas like Oakland a smart purchase location. But like any business venture, the purchasing process must undergo strategic steps so that buyers and sellers reach fair, negotiated and intended legal terms at the end of the transaction. The Letter of Intent (LOI), insignificant as it may seem, must be crafted and delivered carefully for the business agreement to continue without mishaps. When it is time to draft a LOI, consult a contracts attorney and consider the following:
Be Specific and Detailed
Include specifics such as price, terms and the level of access buyers will have to the seller’s business premises, records, employees, customers and suppliers. The LOI generally precedes the formal and exhaustive purchase agreement, but can be prepared as soon as the buyer and seller come to an agreement on price and other material terms. It clearly outlines what both the buyer and seller have agreed upon, contingent upon the signing of the formal purchase agreement.
Show Caution with Wording
Sometimes buyers or sellers are not completely sure of the deal points when it is time to sign the LOI. In such cases,the LOI prompts negotiation of the material deal points prior to the drafting of the formal purchase agreement and results in revised language in the LOI. Buyers and sellers must be careful when negotiating the terms and language of the LOI and make sure that the LOI is clearly non-binding so that no contract is formed.
Protect the Buyer
With previous suggestions in mind, there are contingencies you can include in the LOI that will protect the buyer. They include:
1. Reviewing the seller’s books and records.
2. The availability of suitable financing.
3. Review and acceptance of all lease, vendor and employee agreements.
4. The availability of necessary insurance.
5. The absence of litigation or material adverse changes in the seller’s business.
Bay Area Small Business Attorney At Your Service
If you are buying or selling an Oakland business, contact a trusted business attorney for professional legal assistance. Call us today at (510) 881-8700.