Primary Documents Involved

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 These documents facilitate initial discussions and protect sensitive information before a formal commitment is made. 

• Non-Disclosure Agreement (NDA): A legally binding agreement that ensures prospective buyers maintain the confidentiality of all sensitive information shared during the process.
• Confidential Information Memorandum (CIM): A detailed marketing package for the business, prepared by the seller's broker, outlining operational details, financial performance and growth opportunities without revealing the company's identity initially.
• Letter of Intent (LOI): A preliminary, non-binding document from the buyer outlining the proposed price, payment structure and general terms, signaling serious intent to proceed to due diligence.

 During this phase, the buyer meticulously reviews the seller's operations and financial health. The seller must provide access to a secure data room containing:

• Financial Records: Includes three to five years of profit and loss statements, balance sheets, cash flow statements and federal/state tax returns.
• Legal Corporate Documents: Articles of incorporation/organization, bylaws, operating agreements and any board meeting minutes or shareholder agreements.
• Contracts and Leases: All agreements with suppliers, clients, vendors and landlords, including all relevant property deeds or lease agreements.
• Employee Records: Employment agreements, payroll summaries, job descriptions, benefits plans, and any existing non-compete or non-solicitation agreements.
• Asset and IP Documentation: A detailed inventory of physical assets (equipment, inventory, furniture), along with any patents, trademarks, or copyrights.
• Licenses and Permits: All necessary local, state and federal permits, licenses and certifications required to operate the business legally.

 These are the final, legally binding documents executed to formalize the sale and transfer ownership. 

• Purchase Agreement: The central contract governing the transaction, detailing the final purchase price, assets/shares being sold, liabilities assumed, representations and warranties. This will be either an Asset Purchase Agreement or a Stock Purchase Agreement.
• Bill of Sale: A document used to transfer ownership of tangible personal property and assets to the buyer.
• Assignment and Assumption Agreements: Used to transfer specific contracts, leases and permits to the new owner, often requiring third-party consent.
• Promissory Note and Security Agreement: If the seller is providing financing, these documents outline repayment terms and secure collateral until the debt is paid off.
• Closing Statement: A document summarizing all financial aspects of the deal, including the final purchase price, adjustments and any broker fees.
• Transition Services Agreement (TSA): Outlines the terms under which the seller will provide temporary assistance and training to the buyer after the sale to ensure a smooth transition.