“Discover 10 best practices for crafting a Letter of Intent (LOI) for business acquisitions. Our expert guide helps buyers and sellers navigate M&A with a clear, non-binding LOI. Download our free LOI checklist today!"
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Navigating the future of a business with multiple owners can be fraught with uncertainty and potential conflicts, particularly when it comes time to sell. A buy-sell agreement acts as a safety net, ensuring that all owners have a clear and mutual understanding of how a business will be valued, and the terms under which shares can be sold or transferred. This legal document is not just a formality; it's a critical component of business planning that can prevent costly disputes and ensure the stability of the business through major transitions.
The costs of drafting a buy-sell agreement are a prudent investment in the longevity and health of your business. Depending on the complexity, legal fees for a comprehensive agreement typically range from $2,500 to $10,000—a small price to pay for the security and clarity it brings to your business operations. Remember, the absence of a buy-sell agreement can lead to much higher costs down the line, both in financial terms and in lost time and opportunities.
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The purpose of reps and warranties is to provide the buyer with assurance that the target company is in good condition and that the buyer is not acquiring any undisclosed liabilities or issues that may negatively impact the company's value. If any of the representations and warranties turn out to be false, the buyer may be entitled to seek damages from the seller.
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Why you need an M&A attorney when buying any business…from the perspective of a business broker.
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