Letter of Intent
If you’re interested in purchasing a business, there are numerous legal steps you should take to ensure a smooth business transaction. It’s essential to retain a highly qualified business law attorney to represent you through the entire process.
Our business law attorneys at Gantenbein Law Firm have the experience to conduct and review the company you propose to buy. Our accomplished business law attorneys also hold Master’s Degrees in taxation and have the proven skills to help with due diligence and negotiate your purchase with minimal risk and the maximum benefits for you.
Typically, after an initial negotiation discussing terms with the seller, the purchaser should have a Business Purchase Letter of Intent sent to the seller. The letter of intent is basically your offer to purchase the business. Our business attorneys will draft the letter of intent outlining the material terms (price, payment terms, closing dates and basic conditions of the sale). This letter of intent helps both parties reach an agreement to help ensure any issues are taken care of during the early process of purchasing.
The letter of intent will outline the company’s assets defining exactly what the buyer will be purchasing. Often one or both parties will assume what is being considered in the way of assets and realize later ‘that wasn’t part of the deal’. Having the specific assets written out will stop any confusion about ‘assumptions’.
If there are units of an LLC or shares of a corporation that will be changing hands, that will be outlined in the letter of intent, along with all inventory and accounts receivable. This is the time to negotiate whether you will be purchasing any investments, intellectual assets or other rights the company holds.
Liabilities and any upcoming expenses should be covered in the letter of intent as well. Are there any liabilities associated with the units or stock? Upcoming expenses have to be accounted for such as new equipment was ordered but not paid for. Other upcoming expenses may be labeled as administrative, escrow or document transfers.
The purchase price section of the letter of intent is the most crucial, the most detailed and the most comprehensive. Every detail such as when and what the buyer is purchasing and how much and what the seller will be receiving has to be covered. If there are payments, how and when will the payments be handled, will any funds be held back at closing to ensure the seller’s obligations are met? How will the seller receive funds?
Another important feature of the letter of intent should cover confidentiality. You don’t want your seller opening a competitive business nearby using your purchased client lists. You may want the purchase information restricted to the seller, buyer, respective attorneys and accountants. Are you or the seller going to make an announcement as to the sale of the business or do you want this information protected?
Our business law attorneys are committed to the finest details and the development of effective solutions for you during the process of purchasing or selling your business. Our business is to protect and help you grow yours. Call us for a consultation.
If you are interested in buying a business, it is a good idea to have a purchase letter of intent. Gantenbein Law Firm's qualified business attorneys can expertly assist in drafting or reviewing purchase letters of intent.
to schedule a consult.
Located in Denver, Colorado.