The Non-Compete Agreement - A Negotiated Contract in a Business Sale Transaction
Non-compete agreements are typically included as part of the terms of a business sale transaction to protect the buyer from direct or indirect competition from the seller. A buyer would not want to purchase a business if the seller could relocate down the street. For this reason, buyers usually require that this threat be eliminated.
There are two main issues about which buyers and sellers should be aware. First, a non-compete agreement has competition restrictions if it is to be enforceable and, second, there are tax implications for both the buyer and the seller.
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How are Payables and Receivables Handled When Buying or Selling a Business?
While all transactions are as unique as the parties involved, in most small business sale transactions the seller keeps the cash and outstanding receivables. They pay off the bills and any other outstanding payables and deliver the business free and clear to the buyer.
But payables and receivables are sometimes negotiated to suit the circumstances of the particular transaction, with terms that are beneficial to both buyer and seller.
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How Much Cash is Needed to Buy a Business?
This is one of the most frequent questions we get from those who want to buy a business. Not all ask that question, however, but should.
Since most people only buy a business once in their lifetime, they do not know how much it would take to acquire a business that would fulfill their dreams.
There are two cash requirements to think about before you start shopping for a business.
- How much liquid funds do you need for a down-payment?
- How much do you need to close on the deal?
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This question is often asked by both buyer and seller.
Q: Where will the closing take place?
A: Most closings for small businesses take place in our office. However, for larger acquisitions it depends on the attorneys and the logistics of the parties involved. They have been done in one of the attorney's offices, our office, or by wire transfer, conference call, email and fax. |
