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...
With respect to any service, including assisting in the sale of a business (“Business”) and/or its assets (“Assets”), Morgan & Westfield (“Consultant”) acts only as an independent third party assisting Seller with certain aspects of the transaction. In this regard, the relevant buyer (“Buyer”) and/or seller (“Seller”) acknowledge that:
1.0 Consultant is not an agent, broker, or legal representative of any party. Buyer and Seller acknowledge receipt of the Consultant’s “Agency Disclosure Form” as an appendix to this document.
2.0 Consultant makes no guarantees, representations or warranties regarding the Seller’s Business, its Assets and/or the advisability of entering into the Transaction. Consultant has not verified the accuracy or completeness of any relevant information, received from any source.
3.0 Consultant is not licensed as a securities broker or dealer and has no involvement in advertising, negotiating or otherwise executing a sale of the stock of the Business. If Consultant introduces a prospect for the purchase of the Business Assets, and the parties subsequently decide on a stock sale, this decision shall not affect the Consultant’s right to its fees which shall be paid as though an asset sale had been undertaken.
4.0 Seller is solely responsible for locating the Buyer. Neither Buyer nor Seller is relying upon any statements or representations made by Consultant in deciding whether to purchase or sell the Business or any of its Assets, nor upon any statements or representations regarding the valuation placed on the Business or any of its Assets. Seller is relying solely on his own investigation of the Buyer’s creditworthiness and ability to complete this transaction, repay any Seller financing provided, and to successfully operate the Business. Buyer is relying solely on Buyer’s own inspection of the Business, its Assets, financial statements, business records, contracts, operational history, future profitability and the representations made by Seller and on such other material facts as Buyer, in its sole discretion, deems necessary and prudent.
5.0 Buyer and Seller each acknowledge that Consultant may receive a contingency fee based on the purchase price of the Business and a referral fee from a third party, such as an institutional lender or other professional, and shall not engage any advisor for this transaction unless such advisor also acknowledges the Consultant’s fees. If Consultant’s fee is contingent on completion of the sale and completion is prevented due to the fault of Seller or Buyer, the party at fault shall be liable immediately for any balance due of the Consultant’s fee. Any amount that the Buyer has deposited shall be applied first against Buyer’s obligation under this paragraph. Any party that attempts or persuades others to reduce or impair the Consultant’s fee shall be liable for intentionally interfering with Consultant’s contractual rights. Liability of the Consultant in any litigation or other claim made shall be limited to the amount of any fees actually collected by Consultant in respect to the transaction.
6.0 Consultant is not an attorney or CPA and cannot advise the parties as to any legal remedy, business, or tax consequences of any provision or instrument set forth or prepared in connection with this Transaction. Even if Consultant’s discussions touch upon legal or accounting issues, such should not be interpreted as professional advice or opinions. If legal or accounting advice is desired, the parties should consult an attorney or CPA.
7.0 The Seller and Buyer, and their assigns and successors jointly and severally, indemnify the Consultant and hold the Consultant harmless from any responsibility, losses or liability arising from the contemplated Transaction, the Business or the Assets, or any misrepresentation by Seller, Buyer or any third party.
Foreword: Under applicable law, an “agent” is required to explain to sellers and buyers certain rules and concepts regarding agency and dual agency by giving such parties an “agency disclosure” form. This way, the parties can make an informed decision as to the type of relationship they wish to have with the agent. In this regard, Morgan & Westfield (“Consultant”) acts only as an independent third party assisting a Seller with certain aspects of the Transaction. Unless Consultant specifies otherwise, Consultant has no power to bind the Seller, dispose of the Business, make any representations on behalf of Seller, or otherwise exercise any of the powers of an agent. When acting in this limited role, Consultant believes in good faith that it is not an “agent” as defined by law. Nonetheless, in consideration of the possibility that a court or other authority may determine Consultant to be an “agent,” the Consultant has prepared the following agency disclosure, receipt of which the Seller and Buyer acknowledge.
Explanation of Agency
Agency and Dual Agency: When a broker lists a business for sale, the broker could be deemed an “agent” representing the seller. The same broker also often works with prospective buyers and, by the nature of that relationship, becomes a buyer’s agent as well. This is called “dual agency.” Although different agents of the same brokerage firm sometimes represent a buyer and seller, this is also a dual agency because the brokerage firm that employs each of the agents effectively acts as an agent for both parties.
Full Disclosure: Under applicable law, the buyer and the seller of a business are each required to fully and fairly disclose to the other any and all information which is known to that party, or reasonably should be known, and which may or will be material to the other party’s decision to enter into the transaction. An agent must fully disclose all relevant information known to the agent to the party or parties that the agent represents. An agent, whether acting only for one party or as a dual agent, must make the same such disclosures to the other party, or to the other party’s agent, and cannot withhold any material information which such agent may know, or in the exercise of reasonable diligence, should discover.
Price and Valuation: There is an exception to the rule that a dual agent must disclose all information in his or her possession. In representing both seller and buyer, the agent may not, without the express permission of the respective party, disclose to the other party that the seller will accept a price less than the asking price or that the buyer will pay a price greater than the price offered, even though there otherwise might be a duty to do so. Likewise, a broker acting as a dual agent will not disclose valuations or appraisals prepared by the broker for the seller (but must disclose any comparable sales figures which may have been a major factor in such evaluation), nor the contents of any previous negotiations, contracts or offers between either the buyer or seller and any other parties. This is the only way negotiations can be conducted when the broker represents both the buyer and the seller.
Acknowledgement of Agency Disclosure
Buyer and Seller each acknowledge and agree that:
1.0 The party has carefully read and fully understands the matters discussed above and has had the opportunity to ask questions and/or to seek the advice of legal counsel in this regard.
2.0 If a competent authority determines that Consultant is acting as an “agent,” Consultant shall be deemed a single agent, acting only for the Seller and not the Buyer. Consultant does not represent the Buyer and shall not be deemed as a “dual agent.”