Buying or Selling a Business — Closing the Deal Checklist
A Simplified Checklist When Selling A Business & Closing A Deal
– Adjust purchase price
This would take care of prorated items such as rent, utilities and inventory up to the time of closing.
– Review documents required to be provided by the seller
This would be a corporate resolution approving the sale, evidence that a corporation is in good standing, any tax releases that may be been promised by the seller. Check with your local department of corporations or secretary of state.
– Sign promissory Note
In some cases the seller will financing part of the sale price, so have an attorney review any Note documentation.
– Security Agreements
These documents may be necessary if you are going to finance your purchase. A Security Agreement lists the assets that will be used for security as a promise for payment of the loan.
– UCC Financing Statements
These documents are recorded with the Secretary of State in the State in which you have purchased your business. Again, these documents are necessary if you are going to finance your business.
If you have agreed to assume an existing lease, you will be required to execute the assumption. Make sure that you have the landlords concurrence to assumption of the lease. You may instead have negotiated a new lease with the landlord instead of assuming the existing lease.
If the purchase includes vehicles you may have to execute the transfer documents for the vehicles. You can check with your local department of motor vehicles to determine the correct procedure and necessary forms.
– Bill of Sale
The bill of sale will be proof of the sale of the business and will transfer the ownership of the other tangible business assets not specifically transferred on their own.
– Patents, trademarks and copyrights
May need to execute the necessary forms if part of the transaction.
May have to execute franchise documents if the purchase of the business was a franchise.
– Closing or settlement sheet
The closing or settlement sheet will list all financial aspects of the transaction. Everything listed on the settlement should have been negotiated prior to the closing so there should be no surprises.
– Covenant Not to Compete
It is a good idea to have the seller execute this agreement. This will help add to the success of your operation of the business without any interference from the previous owner.
a- Consultation/Employment Agreement
If seller has agreed to continue working in the business for a period of time, this documentation would be necessary.
– Complete IRS Form 8594, Asset Acquisition Statement
This document will indicate how the purchase was allocated amount the various assets. This is important for your tax return.
– Bulk Sale Laws
Make sure that all bulk sale laws have been complied with in the transfer of the business assets.