Selling your business is a monumental step, often marking the culmination of years of hard work and dedication. As an Arizona business owner, you want to ensure that this transition is as seamless and beneficial as possible. That is where contingencies come into play. Think of them as safety nets in your sale agreement, designed to protect your interests and ensure a smooth transaction. Here are five key contingencies to consider:
Financing approval
One of the most common contingencies is the buyer obtaining financing. This clause ensures that the sale is contingent on the buyer securing the necessary funds. Sellers should set clear deadlines for financing approvals to prevent prolonged uncertainty.
Due diligence period
A due diligence contingency allows the buyer to thoroughly examine your business’s financials, operations and legal standings. This period is crucial for the buyer to verify the business’s value and potential. As a seller, provide transparent and accurate information to facilitate a smooth due diligence process.
Regulatory approvals
Depending on the nature of your business, certain regulatory approvals may be required before the sale can be finalized. This could include licenses or permits specific to Arizona. Including this contingency ensures that both parties are aware of and prepared for any necessary compliance steps.
Inventory and asset verification
Ensure that a contingency is in place for verifying inventory and assets. This allows the buyer to confirm that all assets listed in the sale agreement are present and in the expected condition. This step prevents disputes over asset valuation and condition post-sale.
Lease and contract assignments
If your business operates from a leased property or involves significant contracts, it is important to have a contingency for lease and contract assignments. This ensures that these agreements can be transferred to the new owner without issues, maintaining business continuity.
Protecting your future
By adding these contingencies to your sale agreement, you set the stage for a smooth and successful transition. This is your chance to make sure your hard work pays off and your business thrives with its new owner. To make the most out of this critical step, consider working with a legal professional to tailor these contingencies to your specific needs.