If you have started a small business and another large business eyes it for purchase, you have probably dreamed of this day. After all, when small businesses are bought, the increase in value is commonly large enough to make a business owner a great deal of money. But like any other successful business move, purchasers must do their due diligence. Essentially, an acquirer of your business will want to review a number of documents concerning your business before going through with a deal.
This post will highlight a few of them.
Documents demonstrating good standing –You know that your business is the real deal, and that every component of it exists as you (and others) describe it. However, a buyer has to be assured that it is free from corporate defects, which could potentially lead to lawsuits. Because of this, be prepared to, providing evidence of good standing. This could also include company minutes and annual reports.
Information regarding intellectual property – It is also expected that a business owner will be required to provide information on existing patents or pending applications in all jurisdictions. The same could be said about trade secrets, even though a non-disclosure agreement pending the sale will be signed. Further, a buyer will want to know about any threatened or existing litigation concerning the company’s intellectual property.
Current financials – Last but not least, buyers will want comprehensive information about company’s finances. In addition to current financial information, analyst reports and audited financial statements should be prepared.
If you have additional questions about documents to be provided to a potential buyer, an experienced business law attorney can be of assistance.