A large portion of baby boomers are business owners because the scarcity of jobs when they entered the workforce drove them to create their own jobs and become...
Buyer's Disclosure Statement
The Buyer’s Disclosure Statement is a document that you can request the buyer to complete and sign, in which the buyer makes important disclosures, such as if he/she has ever declared bankruptcy or been convicted of any crimes.
How do I know if I should get the buyer to complete the Buyer’s Disclosure Statement?
It is nearly always a good idea to ask that the buyer complete the Buyer’s Disclosure Statement. It is absolutely essential especially if you are not getting all cash for the business. Oftentimes, you will remain on the lease even if you sell the business for cash and it would also be a good idea to ask that the buyer complete the Buyer’s Disclosure Statement.
When in the process should I ask that the buyer complete the Buyer’s Disclosure Statement?
Use common sense. When the buyer first contacts you, it doesn’t make sense to ask for more than anything than a non-disclosure agreement. If you have met the buyer several times and they are serious about buying your business, then it is probably a good time to ask them to complete the Buyer’s Disclosure Statement. Somewhere between these two times is fine to ask that they complete the Buyer’s Disclosure Statement. If the buyer requests to see confidential documentation regarding your business such as your financial statements, then it is wise to ask that they complete the Buyer’s Disclosure Statementbefore releasing the information to them.
What does the Buyer’s Disclosure Statement cover?
The Buyer’s Disclosure Statement covers 13 very important questions that you will want to ask of any buyer. It is also important that you get the answers in writing along with a signature.
The Bottom Line:
The Buyer’s Disclosure Statement is an important document you should ask all buyers to sign when they have expressed an interest in purchasing your business. Be sure the buyer completes the document and signs it.
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- PDF and Microsoft Word format (can be easily edited)