All want to avoid litigation due to your financial exit. Carverlon-Ltd can help you plan and execute your financial exit.
Naturally you want to learn how to avoid litigation due to your Financial Exit. You need robust legal and financial advice. This Post helps you to develop the questions to discuss with your attorney and financial adviser assuming that you will execute a financial exit by acquisition.
How to avoid litigation due to your Financial Exit
- Acquire experienced legal advice
- Have you and your officers plan on being honest. Do not conceal material facts
- Develop a team of experienced players to ensure that you present a professional posture. Include an experienced lawyer and accountant. You may want to include an experienced intermediary. Your team should discuss potential deal terms, holdbacks, offers for less than 100% of the equity, asset only deals and other topics suggested by your attorney and financial adviser.
- Think through the warranties and representations that you expect an acquiring entity to request
- Develop an all-inclusive assessment of your business and the material aspects of its history. Include the negative topics. Remember to consider discontinued operations and discontinued products. Potential buyers will appreciate your candor
- Prepare an inclusive set of historical financials. Include EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). You want the potential buyer to develop an understanding of the sustainability of current earnings
- For any serious prospect ensure that they perform detailed independent due diligence. Include the due diligence documents in the final “Deal Package”
- Discuss with your team how to ensure that the closing documents are complete. They must consider potential disagreements after closing and address them; equipment, inventory condition and value, aging of accounts receivable, etc.
- The buyer may want key employees to commit to employment or transition or consulting periods. Be sure that all agree.
- Use confidentiality agreements to protect customer, vendor and employee etc. Relationships
- How can you demonstrate that you are working to support the buyer’s success?
Listen to your attorney and your financial adviser. Think through how you can protect your buyer’s interests and how you can protect the interests of you, your employees and your other stakeholders.