Signing a letter of intent (LOI) is a significant turning point in any merger or acquisition process. The LOI outlines the terms of the deal including the price, which assets and liabilities are included in the deal, the terms for buyer exclusivity, and any other conditions to close. While you’ve likely felt stress and exhaustion leading up to negotiating the final LOI, things will get even more intense after the document is signed. Here’s what to expect in terms of the next steps after an LOI is signed.
The Start of Due Diligence
After signing the LOI, due diligence begins in earnest. This involves a detailed examination of the seller’s business, sensitive financial records, contracts, legal matters, and other relevant aspects of the deal. The purpose is to verify the accuracy of information provided and to identify any potential risks or issues with the transaction. Now is the time for a deep-dive analysis into the acquisition.
Ongoing Negotiations
Completing a business purchase and sale agreement is one big process of ongoing negotiations. There are negotiations leading up to the LOI, and there will be negotiations through to closing.
In terms of negotiation power, due diligence often ends up benefiting the acquiring party. Their findings may lead them to revise the terms of the deal and could give them an upper hand in negotiation. But like all negotiations, it’s a bit of a dance. Be sure you are surrounded by experienced professionals and expert legal counsel.
Drafting the Purchase and Sale Agreement
Upon completion of due diligence and ongoing negotiations, one of the remaining steps will be to draft the final purchase agreement. This agreement will be binding. The business purchase and sale agreement outlines the terms and conditions of the deal and legally formalizes it. Negotiating a business purchase or sale agreement can take several months, but ensuring the terms align with your goals is paramount. If you have plans to purchase or sell a business in South Florida, get in touch with our team.
At Sirulnik Law, we’ve managed and negotiated a broad range of transactions, including those upwards of several million dollars. We provide services from the early pre-due diligence stage through to transaction closing. To learn more about how we can help you, contact us at the Law Offices of Alex D. Sirulnik, P.A. to request a free consultation.