Problem: A businessperson wants to purchase or sell a business.
If the businessperson has already negotiated terms for the transaction, Cooper Law LLC may draft a letter of intent (or other preliminary agreement). There could be several purposes for doing this, including obtaining:
a written binding commitment from the other party to move forward in good faith to definitive documentation of all the terms in the letter of intent,
the other party’s confidentiality commitment, and/or
the other party’s agreement not to shop around for other terms, either for a set period of time or for as long as negotiations are moving forward toward final documentation.
We also provide advice to buyers and sellers on the basic conflict between the buyer’s interest in acquiring the assets of the company free of any associated liabilities and the seller’s interest in selling the stock of the company to the buyer in order to obtain capital gains treatment for the transaction.
Sometimes the parties want to begin with the definitive documents (or will do so after the execution of a letter of intent). We would help a client:
to understand alternative structures for a transaction to buy or sell a business (or a set of assets),
to complete effective due diligence in order to understand and know more about the business they are buying or about the buyer with whom the seller is negotiating, and
to negotiate and draft appropriate sale or acquisition agreements and other documentation.
This might include drafting or reviewing and negotiating notes reflecting promises to pay a portion of the purchase price over time, an escrow agreement with respect to the holding of some portion of the purchase price in escrow (in the event that the business does not perform as expected) or a security agreement and financing statement under the Uniform Commercial Code, creating a security interest in (and recourse against) the assets sold in the event that payment is not made in full.