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The entire process of dealing with a potential Buyer should be viewed as a continuous negotiation. Because of the quantity and complexity of information many issues that appear to be resolved are revisited again and again as the potential buyer digests the details of the transaction and as the parties proceed through various discussions.
If you are properly prepared you will have a valuable Company Offering Package (COP) consisting of a professional Valuation and Company Presentation, along with the source documents used to support the value of your business and the asking price. With these materials and some good negotiating skills your objective is to keep the price as close to your valuation as possible.
As a practical point, the Buyer will begin a serious investigation by reviewing your information away from your business. Such information will include the COP and financial statements, tax returns, or other documents you have decided to supply for an interim review. Additional meetings and discussions will take place as the Buyer does the homework necessary to determine if he will move forward to purchase your business.
Sometimes, in the early stages of negotiation, the Buyer will seek information that is critically confidential and important to the success of your business. The Seller should try to guide these types of inquires to the later phase of Due Diligence. You are saying, in effect, that information is as represented in the Company Offering Package, and you can verify that as a condition of sale once we have come to agreement regarding price and terms.
If the Buyer's review proves satisfactory then the Owner needs to keep the process moving forward and work to obtain written agreement. This agreement is called a Letter of Intent (LOI). It is a non-binding intermediate agreement that facilitates moving forward toward closing the sale. (Negotiating the Business Sale)
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