8 ways to avoid litigation when the business is sold

Storm clouds building on recent litigation, and business owners planning exit strategies better legal margarine down the gates.
As a business owner, small business, and your company is probably an important part of your net worth. This is why it is necessary not to allow litigation wash when it comes time to turn years of hard work your cash.

Selling a business requires large sums of money and a wide range of issues, including the guarantees and assurances, and disclosure of contractual obligations. Therefore, there are many opportunities to talk to the litigation. Litigation is not only unpleasant and disrupt your lifestyle, but it is also very, very expensive - even if you win.

But not wishing, hoping and praying, a small business owner to do? Instead of trying something more positive complain. Here are eight strategies that must be followed when selling your business that can help to reduce the problems of litigation.

1. Honesty is the best insurance policy. Tell the truth about your business. Do not try to hide the problems or issues that, if not detected, could serve as a basis for future litigation. Make sure that the cost of detection in the treatment of very low compared with the cost of litigation for non-disclosure.

2. Confidential business browse mode. It is a document of great quality and a comprehensive description of your company and its background. In this paper, clearly indicate the negative aspects that are involved in the business. Detected not only reduce the risk of litigation, it will also add to your credibility with potential buyers and save time by eliminating those who do not accept the reality of your business.

3. Communicate accurately the historical financial results. Do some shows on the purchasing power of your business. Ideally, this information will be presented in summary form recasts that the estimated expenditure of your other and some to show EBITDA (earnings before interest, taxes and depreciation).

4. Asked the buyer to go through ensuring accurate and comprehensive. Due diligence is the process that takes place on the buyer to conduct an independent investigation of the information you provide about your business. It should be integrated and written documents to due diligence and legal documents specific to reduce the risk of litigation.

5. Assembling a strong team of experienced professionals. And your accountant and your lawyer plays a key role, and their experiences and reduce the risk of litigation. You can also benefit from the assistance of a company experienced broker, broker or mergers and acquisitions, which specializes in the sale of private-sector companies. However, before hiring a broker, make sure they do not charge upfront fees and do not have a history of litigation.

6. Make sure that the final documents are thorough and complete. Not only do these documents contain appropriate legal language, you should also expect to address differences and potential that may arise after the closure - on issues such as the value of equipment or inventory status and recovery differences owe more than that. And easily address these problems during the seduction phase with the buyer, but they can cause big problems after the transaction is complete and the honeymoon phase is over.

7. Be careful with the transition and work and consulting agreements. If you enter more than long-term agreements with your buyer, make sure that the conditions are fully compatible with your retirement plans. Otherwise, you run the risk of being unwilling or unable to fulfill your obligations, and this can lead to litigation.

8. Maintain confidentiality at all stages of the sales process as a whole. Although the secret is not to protect you against litigation directly, and will help to reduce the risk of loss of valuable employees, customers and suppliers in the process. One of the best ways to avoid litigation is to help ensure the success of your buyer, because the success significantly reduces the basis of the damage.

The goal is to succeed, regardless of the transitional phase. Take the time to recognize and work on the many opportunities you have to reduce the risk of private litigation and reap the rewards later.