So You Want to Sell Your Business…What Steps Should You Take?

So You Want to Sell Your Business...What Steps Should You Take? by Aimee B. Davis

{3:30 minutes to read}  I’ve represented clients seeking to buy and sell small- and middle-market businesses for over 20 years. Often these clients are first-time sellers and/or buyers.

As one can imagine, first-time sellers can feel a certain way about parting with their baby. Because selling one’s business can be an emotional experience, I thought it would be helpful to lay out the basic steps to consider when entering into any Merger & Acquisition (M&A) transaction:  

Step 1. Negotiate a Non-Disclosure Agreement (NDA)

A threshold issue in negotiating NDAs is agreeing to the survival period of the restrictive covenants. Sellers want them to run for as long as possible (even indefinitely), particularly in strategic sales. But in private equity deals, you see only one year covenants not to disclose confidential information because this seller typically isn’t engaged in the operations of the business. Also, I often negotiate the scope of the exceptions to confidentiality covenants.

Step 2. Negotiate a Letter of Intent (LOI)

In October 2017, I wrote an article questioning whether an LOI is necessary. In certain cases, I agree that entering into an LOI may be a helpful next step for first-time buyers and sellers to confirm they have a “meeting of the minds” regarding the basic deal terms. An LOI also provides a roadmap for negotiating the definitive purchase agreement (Definitive Agreement). There are fewer pages to digest, enabling the parties to focus on what they are actually agreeing to, and how onerous the process may be as they move into the due diligence phase.

Step 3. Conduct Due Diligence

In February 2016, I wrote an article entitled “What Does Due Diligence Bring to the Table?” There I stated that due diligence is a valuable, important and necessary component in every M&A transaction. Due diligence can be conducted either by the principals who are buying the business or with the assistance of the Buyer’s attorney. Even when representing sellers, I recommend conducting my own due diligence to gain a basic understanding of my client’s business. I find this necessary to the extent I will be involved in preparing schedules to the Definitive Agreement. These schedules set forth exceptions to the representations and warranties to be made by Seller. As such, I want to ensure the accuracy of the statements to be made by my client with respect to the business being sold.

Step 4. Negotiate the Definitive Agreement

If the parties have signed an LOI or if the deal is proceeding without one, the next step is drafting and negotiating the Definitive Agreement. Typically, Buyer’s counsel prepares the initial draft, and Seller’s counsel provides comments. This means that after reading the draft and discussing it with her client, Seller’s counsel will prepare a “mark up” or “redline” of the draft. There are several components to the Definitive Agreement, which will be discussed in future blogs, just to keep you all cliff hanging….

Aimee B. Davis Law P.C. is committed to advising its clients and resolving issues relating to the legal and business matters that are important to them. If you have any questions, please feel free to contact us at (917) 617-2243 or email aimee@aimeebdavis.com.

Aimee B. Davis

Aimee B. Davis
Aimee B. Davis Law P.C.
122 Ashland Place
Brooklyn, NY 11201
www.aimeebdavis.com
aimee@aimeebdavis.com


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Can an Entrepreneur Regularize Her Income?

Can an Entrepreneur Regularize Her Income? by Aimee B. Davis

{3 minutes to read}  One thing an entrepreneur can rely on is that from time to time she will encounter a rather unpredictable revenue stream. That’s okay, some folks have the stomach for this and others simply don’t. Frankly, I didn’t know the strength of my own gut until I found out in practice.

Can an Entrepreneur Regularize Her Income?

After eight years as a solo practitioner, I have discovered some tactics that can be employed to help regularize one’s revenue:

  1. Maintain the Hustle – In my experience, you must continue, and be consistent about “Showing Up” in your networking efforts, even during busy times. I remember attorneys in Big Law struggling to maintain consistent networking efforts in the midst of their big transactions. But as a solo, I’ve learned firsthand of the damage wrought upon my pipeline from a brief lapse in my own networking efforts.

       I recommend you keep on your hustle.

  1. Follow Up with Clients and Prospective Clients – At the end of the year, I had several deals go ON HOLD for one reason or another. So, in keeping with my advice above, I stayed on my hustle by following up with those clients to remind them that I am ready, willing and able to refocus on their matters. I also reached out to certain referrals and prospective clients that I was introduced to at the end of last year with the same message.

       I recommend you follow up.

  1. Invoicing – One of the keys to success is to invoice one’s clients on a regular and consistent basis. If you fail to bill on a timely basis, you send your clients a message that you don’t care much about timely payment. Sounds obvious, right? But, I know plenty of attorneys who month after month got in trouble with Big Law administration for failing to timely submit billing information.

       I recommend making billing a priority.

  1. Be Curious – When asked recently to what she attributes her long-term success, Martha Stewart said she attributes it to remaining curious and trying new things. See Martha & Snoop’s Potluck Dinner Party. Martha’s remark harkens me back to one of the best pieces of advice I’ve ever received. When I first lost my job in Big Law, I had a courtesy interview with a senior in-house attorney at CBS. This woman had seen it all over the course of her long-standing tenure with CBS and its predecessors. Like me, she was a media lawyer, involved in the conversion from analog to digital, as well as the introduction of the wireless and other telecommunications industries. She said, the most important attribute that an attorney could have is to be adaptable.

       I recommend you stay adaptable and curious.

What ideas do you have as to how to regularize your income?

Aimee B. Davis Law P.C. is committed to advising its clients and resolving issues relating to the legal and business matters that are important to them. If you have any questions, please feel free to contact us at (917) 617-2243 or email aimee@aimeebdavis.com.
Aimee B. Davis

Aimee B. Davis
Aimee B. Davis Law P.C.
122 Ashland Place
Brooklyn, NY 11201
www.aimeebdavis.com
aimee@aimeebdavis.com

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Checking In on the Status of Impact Investing

Checking in on the Status of Impact Investing by Aimee Davis

{3:15 minutes to read}  It’s been over three years since I learned and wrote about, Impact Investing.

What is Impact Investing?

Emerging in 2007, impact investments are made into companies, quasi-governmental organizations, and funds, with the intention of generating a measurable, beneficial social or environmental impact along with a financial return to the investor.

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Maintaining Your Top Shelf Position

Maintaining Your Top Shelf Position by Aimee B. Davis

{3 minutes to read}  Richard Kestenbaum’s articles on M&A transactions in the fashion and consumer product industries are regularly published online in Forbes. Richard has been doing mergers, acquisitions, and capital-raising for over 35 years. I always read his articles and find his observations fascinating.

I recently had the privilege of interviewing him as a follow-up to his article about Nestle entering into a licensing deal in May 2018 to market, sell, and distribute Starbucks coffee globally. I wanted to better understand what I perceived to be his skepticism of the deal and his concerns about why this arrangement may diminish or dilute the Starbucks brand.

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The Inhumanity of Virtual Networking

The Inhumanity of Virtual Networking by Aimee B. Davis

{3:30 minutes to read}  As a corporate transactional attorney for the past 24 years, I think it’s fair to describe myself as a senior statesperson in the NYC business world. I’ve been at it so long I don’t remember who taught me the value of returning phone calls on a same-day basis.  Nevertheless, this good business practice persisted into the digital age, and I make an effort to respond to emails similarly.

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Legal Brush Strokes – The Convergence of Art and Technology

(4 minutes to read}  In July’s blog, I discussed the convergence of the fashion industry with new technology. Now, there’s a hot new convergence of the art world and technology.

In fostering her own “second act,” actress Portia de Rossi recently launched an online venture called GENERAL PUBLIC. The CEO/Co-Founder summarizes her art publishing and curation business below:

“I formed my company, GENERAL PUBLIC, with a view to bring good art to more people. As a long-time art lover and collector, I became fascinated with the concept of reproducing paintings using 3-D technology because I believe the artist’s work should be shared by as many people who wish to own it and not just enjoyed by one collector.”

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Real Estate Leasing and Consideration of the “Silent” Issues

{3:48 minutes to read}  At Aimee B. Davis Law P.C., I often represent tenants entering into either billboard leases or commercial space leases.

Real Estate Leasing and Consideration of the “Silent” Issues by Aimee B. Davis

In real estate leasing, it is customary for the landlord’s attorney to serve up the first draft, and for the tenant’s attorney to provide comments.  With billboard leasing, the tenant more likely presents the first draft, as they are the experts in this space. A billboard lease is unlike a general commercial space lease, and there are special provisions that are standard in the industry. Conversely, there are provisions that customarily arise in commercial space leases that are absent in billboard leasing.  

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When Legal Issues Become Business Decisions

When Legal Issues Become Business Decisions{3:30 minutes to read}

As a transactional attorney, I typically spend time trying to cap or limit my client’s indemnification obligations when negotiating contracts. The word “indemnity” is a legal concept, the meaning of which may not be familiar to non-lawyers.

According to Wikipedia, indemnity is defined as: “a contractual obligation of one party (indemnitor) to compensate the loss occurred to the other party (indemnitee) due to the act of the indemnitor or any other party.”

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The Value of Having Multiple Relationships Within a Client’s Organization

The Value of Having Multiple Relationships Within a Client’s Organization by Aimee B. Davis{3.30 minutes to read}  For over 20 years, I’ve represented clients in the fashion merchandising industry. Since launching Aimee B. Davis Law P.C., my expertise in this space has been enhanced by my other specialties in new media, telecommunications, and the outdoor advertising industries. This is due to the fact that the fashion industry continues to converge and grow with developments in new technology, from the use of high-tech fabrics to wearable technology (i.e. Apple Watches). It’s a privilege for me to have a broad-based experience in these practice areas because I’m a FASHION FAN!

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A Networking Lesson and Reflections on a Professional Journey

A Networking Lesson and Reflections on a Professional Journey by Aimee B. Davis{3:36 minutes to read}  Last month, I focused on the value of my mentors. Coincidentally, I recently came across a person on TV who refers to himself as “The Superconnector.”

Chris Winfield advises new college graduates to connect with the 20 most influential people in their lives — he recommends sharing the job they really want with them, and asking for their help.

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