Chatting to an old client the other week (just before Saxon’s opening concert for their 35 year anniversary tour – just had to mention) about the ins and outs of selling his business. From the chat it was all about trust – his buyer was willing to acquire all the shares on the basis of a stock transfer form only.
That may be a great position to be in as a seller. Not necessarily that great for a buyer though. The principle of “caveat emptor” applies, so if a buyer doesn’t ask any questions, he won’t get any answers. If he doesn’t seek any protection he won’t get any.
Neither a seller nor a buyer should to be too rough and ready on a sale/purchase transaction (or on anything else for that matter). A well organised business, with good questions raised by a buyer and being answered efficiently by a seller, and with a sensible contract governing the deal, can maximize the price being sought or offered. If a buyer wants to know something, then he should ask the question. If a seller needs to get his house in order then he should do so. Skeletons in the cupboard? Get them in the open to deal with, and early. For both parties: protect yourselves.
I’m all for deals being done on trust and honour, of course. But thought should always be given to asking appropriate questions, and seeking appropriate contractual protection when selling a company or a business. It could be the only time you do it, either as a seller or a buyer, so it makes sense to spend some time to get it right.