Questionnaire for Business Sales

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Questionnaire for Business Sales

Below is a list of questions to ask when considering the sale of your business to another person or party.  Each of these questions are tailored to evoke additional thoughts and questions.  It is recommended that you review these with an attorney.

    • Who is the buyer and how do you know them?
    • How do you know the price is fair?  How was the price determined?
    • Are you selling the entire company or less than 100%?
    • How is the buyer paying for the purchase?
    • If the buyer is paying you via promissory note, what are the terms and what is the security?
    • Will there be an earn-out?  What are the terms?
    • Will any of the purchase price be held in escrow to be released at a future date?
    • How long will the indemnification period last?
    • Will there be an indemnification basket (hurdle and cap)?
    • What are the outstanding liabilities of the business and whose responsibility are they post-closing?
    • Will there be a due diligence period?
    • When is closing?
    • Are you making any guarantees / warranties about the assets, revenue, expenses, etc.?
    • Have you thought about whether this will be an asset sale versus a stock sale?  Have you spoken with your accountant about this choice?
    • Are there any licenses in the name of the business that may need to be re-licensed post-close?
    • Are there any licenses in your name that the buyer must have?
    • Is the buyer taking the name of the business or is that staying with you?
    • Will there be a restrictive covenant?
    • Will you continue to work in the business after closing?
    • Is there real estate in the business?
    • If the real estate is leased, are you a current guarantor on the lease?
    • If the real estate is leased, does the lease permit you to assign it in the event of an asset/stock sale?  Would the landlord be flexible?
    • What will be left in the business?  Cash?  A/R?
    • Whose responsibility is it to collect A/R?  To pay A/P?  Who gets the benefit of the receipt of A/R?
    • Are there any assets in the business’s name that will not be transferred to the buyer?
    • Are there any assets in your name that will be transferred to the buyer?
    • When would you like this transfer to take place?
    • What industry-specific items should we address?
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