Selling a small business in NPB. Need advice please

[450grip]

My GF is selling her nail shop in Newport Beach.
She has a buyer that initiated contact and is pushing the purchase.
The terms and sale price has been agreed upon.
We’re not sure how to move forward so that this is smooth and financially safe for both parties.
The sale includes taking over the lease of the existing shop, the shop name, all shop contents.
Any suggestions on where to start? Anyone here handle this sort of thing as a profession?

 

[Ziggy]

Business Brokerage.

 

[Xring01]

A Business Lawyer, or brokerage as mentioned above. If its a smaller transaction leave it that.

If its a larger transaction then you need accountants, lawyers, insurance and consultants.

 

[yz450mm]

Talk to the landlord first, and definitely before any money changes hands. I've personally seen many people "sell their business" without involving the landlord, then the new owner gets a rude awakening when the landlord won't sign a new lease/extend the lease/etc...

For example: Your wife sells the business to a new owner, but the new owner doesn't qualify for the lease assumption or for a new lease with the landlord. Your wife will still be on the hook for the duration of her lease term, even though she's moved on from the actual shop.

 

[sonicss31]

I might add, make sure that if the landlord agrees to everything, that you get this agreement in some form of a legal document.

 

[lakemadness]

I've bought and sold businesses. With how you describe the current situation - knowing you have never done this, go get a business attorney to represent you. You should also get some advice from an accountant - is this an asset sale or stock sale should be their first question - that will dictate the financial impact.

You need representation otherwise you will fuck something up and regret it and it will cost you more.

You already have a willing buyer and a willing seller - Dont engage a broker. All they'll look out for is a commission fee.

 

[450grip]

Thanks to everyone the advice!

The landlord has already agreed to the sale

Is there an RDP member looking for a new client to represent us with this?

 

[Tooms22]

I've bought and sold businesses. With how you describe the current situation - knowing you have never done this, go get a business attorney to represent you. You should also get some advice from an accountant - is this an asset sale or stock sale should be their first question - that will dictate the financial impact.

You need representation otherwise you will fuck something up and regret it and it will cost you more.

You already have a willing buyer and a willing seller - Dont engage a broker. All they'll look out for is a commission fee.

I support this approach. A broker can definitely have a horse in the race when it comes to the deal closing. But if you don't have a buyer, they are more helpful.

An attorney wants you to be a happy client but gets paid either way. So a blown up deal only affects the attorney if they did something wrong to cause the deal to go sideways.

I've handled some asset and stock sales for clients.

I usually tell clients to talk to an accountant because the tax implications are a big factor.

A solid agreement is important to avoid post transfer liability.

If you choose to do an asset sale, you might want to wind down the entity.

And hopefully your landlord doesn't keep you on the hook for the remainder of the lease.

Depending on the financial situation of the buyer, you can also request that their attorney draft up the necessary documents and then you are just being charged by your attorney to review/edit the documents.

 

[Caydens Cat]

Thanks to everyone the advice!

The landlord has already agreed to the sale

Is there an RDP member looking for a new client to represent us with this?

I can ask the Mrs for an attorney on the tenant side of a transfer (she only does owner/landlord to avoid conflict of interest). I’ll PM you when I have a chance to ask her.

 

[J DUNN]

I’ve got a great attorney who does M&A mainly but also helps with small business deals. I’ve used him on my recent building purchase and will again when I sell my business. I’ll DM you.

 

[RiverDave]

My GF is selling her nail shop in Newport Beach.
She has a buyer that initiated contact and is pushing the purchase.
The terms and sale price has been agreed upon.
We’re not sure how to move forward so that this is smooth and financially safe for both parties.
The sale includes taking over the lease of the existing shop, the shop name, all shop contents.
Any suggestions on where to start? Anyone here handle this sort of thing as a profession?

Just goto any escrow company..

 

[samsah33]

Talk to a lawyer and accountant who knows these areas. There's too many moving pieces and you could end up getting pencil-whipped on this. Like others have said, is this an asset sale or an equity sale? Need to make sure the buyer can assume the lease, same goes for all vendors - can their contracts be assigned or is notification required for change of control, whose name is on the business and are you selling name rights/customer list, who decide purchase price allocation for taxes, have you done diligence on the buyer to make sure they can fulfill their obligations (eg do they have the cash, are you giving them a note on the purchase, background checks, liens, tax returns, etc...), will they give you/GF a bad name if they are bad biz people, who owns liabilities that existed before the sale, what about undisclosed liabilities, how are personal property taxes allocated, have you gotten a business valuation to make sure what they're paying is fair, any employee liabilities, sounds like GF deals with chemical - any toxic waste liability risk, fees, notifications, defauts + cure time, etc...

In other words get some help...!

 

[450grip]

Very helpful replies and lots of great info.
Thank you!

 

[lakemadness]

Yes as Tooms22 said above, the buyer almost always pays to have the purchase contract drafted. But if you already have terms worked out, they may not want now spring for that bill. Assuming this is on the smaller end both financially and in complexity, it shouldn't be much - 5-7K?

 

[ChumpChange]

I've bought and sold businesses. With how you describe the current situation - knowing you have never done this, go get a business attorney to represent you. You should also get some advice from an accountant - is this an asset sale or stock sale should be their first question - that will dictate the financial impact.

You need representation otherwise you will fuck something up and regret it and it will cost you more.

You already have a willing buyer and a willing seller - Dont engage a broker. All they'll look out for is a commission fee.

Most brokers won’t even step in at this point to help because there’s no way for them to justify their 10% commission and they won’t charge less.

 

[JUSTWANNARACE]

Do not sign a "no compete" clause if one comes to the table.

That's all I got

 

[BabyRay]

Do not sign a "no compete" clause if one comes to the table.

That's all I got

I signed a non-compete when I sold my business, and later went to work for the buyer’s competitor. The buyer hadn’t paid me specifically for the inclusion of the clause, so I was advised it was unenforceable. This was in Washington.

Of course, I’m not offering legal advice.