Most small business owners in Virginia have learned to be effective salespeople. Knowing how to market one's business and convince clients and customers to work with you is a crucial element of success and many people take an enthusiastic, "always be closing" approach to selling the company's services. While this is incredibly useful in many situations, there are also times when it's important to be more realistic about the state of the business, particularly when discussing a merger or acquisition with another company.
There are positives to sometimes including negative aspects of the business while negotiating or discussing a buy or sell agreement. To begin with, disclosing material facts that could influence the buyer's decision is important to avoid liability later if a buyer believes that a seller tried to hide information.
Discussing negative aspects or struggles that your business faces also provides the opportunity to discuss solutions to those problems and the positive changes that the sale could bring. Or, for small businesses that are merging with a competitor, this is a good time to start a conversation about the changes that will take place and how the two companies could work together to solve these problems.
As in any purchase, sale, or merger of a business, it is always beneficial to discuss these issues with an experienced attorney who has negotiated and drafted these types of deals in the past. That person can provide tailored advice on what is crucial to disclose and what information is acceptable to withhold without jeopardizing the overall deal.
Our Fairfax county law firm handles business formation and planning issues as well as mergers and acquisitions. More information about how we can help local businesses with their legal needs can be found on our website.
Source: New York Times, "On Volunteering Negative Information When Selling," Tom Szaky, Nov. 5, 2012.