In future posts I will be discussing various aspects and clauses inherent to both of these offer documents, but for now, I want to focus upon the philosophical side of making a formal offer to buy a business. I completely understand anyone being apprehensive about making an offer; I’ve been in the exact same shoes. It’s exciting yet scary. But, you have to get over it. Making offers is part of the business buying process.
Furthermore, it's the only way to take a seller’s temperature and see what they're REALLY thinking.
For example, what if the seller did not remit accurate payroll taxes? IRS issues follow the business so while you may only be buying the assets of the business, you're still liable. Or, what if the seller does not provide the agreed upon training? What if there are former employee lawsuits against the business, or supplier claims for unpaid bills that arise? There are hundreds of other such examples. However, it's impossible to identify each and so the agreement itself will have language that deals with the possible breaches that may arise after closing which may be a result of seller actions prior to the closing. The agreement will provide a mechanism to resolve them.
It's also important that buyers familiarize themselves with the general terms and conditions of a business purchase agreement so you'll know how to effectively negotiate one. Be sure to reference the sample agreement in our various "How To Buy A Good Business At A Great Price” guides in the section on Negotiating the deal and making an offer.
As a final word:
This article represents a fraction of what you’ll learn on this topic in the How To Buy A Good Business At A Great Price© series - the most widely used reference resource and strategy guide for buying a business. To learn more click here
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