Team

Attorney

For middle-market transactions, the buyer often brings a team of dozens of staff and advisors to due diligence. As a result of the imbalance, you should aim to at least achieve negotiating parity by hiring the best advisors you can afford.

While an attorney is not a requirement in all transactions, they can be tremendously helpful. While many small transactions successfully conclude without an attorney, all sellers should hire an attorney and have them prepared to become involved in the transaction at a moment’s notice. If the buyer of your business is a corporate or financial buyer, your attorney will need to be intricately involved in the transaction.

Click here for additional information on working with attorneys.

Escrow

An escrow agent is a third party charged with the responsibility of holding all monies and papers until all conditions of the escrow are observed.

Escrow is often required if third-party (e.g., bank) financing is involved. Escrow serves several important functions in the sale of a business. The escrow fee is normally split 50/50 between the seller and the buyer.

Click here for additional information on working with escrow companies.

Franchisor

If you are selling a franchise, your franchisor will play a vital role in the process. In such cases, we recommend that you contact your franchisor as early as possible in the process to gain their cooperation and determine what role they will play and what assistance they may provide in selling your business. Some franchisors provide extensive support, while others play a limited role.

Ask your franchisor for a written description of the process of transferring your franchise. The process for transferring a franchise differs from franchise to franchise. For example, some franchisors ask buyers to attend “discovery day,” while others don’t; and other franchisors require that the buyer complete the training before the closing, while others don’t. Obtain a written description of the process to be sure.

Click here for additional information on working with franchisors.

Landlord

The lease is one of the most critical elements of the sale process. The assignment or transfer of your lease should be handled with care because issues with leases or landlords can be common deal-killers.

Nearly every commercial lease requires the landlord’s consent to assign or sublet the lease. We recommend involving the landlord in the process as early as possible. Find out if your lease is transferable and if there is a transfer fee before you find a buyer.

Ask the landlord what the most important qualifications are for a new tenant (experience, credit score, financial strength, etc.) and help the buyer address these in their presentation to the landlord. A landlord will not approve a buyer if they lack experience in the field or have less than excellent credit. The landlord is a strong, deciding force and can make the rules in a deal or effectively kill the deal.

Click here for additional information on working with landlords.