How a Business Sale Affects Your Employees (Owner’s Honest Guide)
What actually happens to employees post-close: retention, layoffs, benefits transitions, non-compete enforcement. Different by buyer type — search funds keep most, strategics cut most.
Understand Seasonality’s Role in Business Valuation
Understand Seasonality’s Role in Business Valuation Quick Answer Seasonality affects business valuation by creating concentrated revenue patterns that increase working capital risk and can suppress multiples by 10-20% if not normalized properly. When a company earns 70-85% of annual revenue in one or two quarters, lenders and buyers view it as higher risk despite stable […]
Valuing Businesses with Cash-Only Operations
Valuing Businesses with Cash-Only Operations Quick Answer Cash-only businesses typically sell at a 10 to 25 percent discount to comparable credit-based businesses due to perceived earnings uncertainty, but that gap narrows significantly when owners document all revenue streams, reconcile daily deposits, and build formal income records that appraisers can audit. Buyers and lenders discount valuations […]
Mastering Basket and Cap in M&A Indemnification
Mastering Basket and Cap in M&A Indemnification Quick Answer Basket and cap are indemnification provisions in purchase agreements that control post-closing risk allocation between buyer and seller. A basket sets a minimum threshold of losses before the seller must indemnify the buyer, typically ranging from 10,000 to 100,000 dollars or 0.5 to 1 percent of […]
Representations and Warranties: Safeguarding Deals for All Sides
Representations and Warranties: Safeguarding Deals for All Sides Quick Answer Representation and warranties insurance covers losses from breaches of a seller’s statements in a purchase agreement, with premiums typically running 2% to 4% of the coverage limit. This policy shifts post-closing exposure to an insurer, allowing buyers and sellers to reduce escrow holdbacks, streamline indemnity […]
Seller Expectations for Employment Agreements Post-Sale
Seller Expectations for Employment Agreements Post-Sale Quick Answer Most employment agreements transfer automatically in a stock sale, but in an asset sale the buyer typically assumes only agreements for key employees they choose to retain. Either way, sellers should expect buyers to conduct detailed due diligence on wage and hour compliance, benefits administration, and restrictive […]
What is a No-Shop Clause and When Should You Agree to One?
What is a No-Shop Clause and When Should You Agree to One? Quick Answer A no-shop clause is an exclusivity provision that prohibits a seller from soliciting or accepting competing offers for a defined period, typically 30 to 90 days. It gives the buyer uninterrupted time to complete due diligence and protects both parties’ investment […]
The Essential Closing Conditions Checklist for Business Sales
The Essential Closing Conditions Checklist for Business Sales Quick Answer A closing conditions checklist for business sales is a legal and practical roadmap that identifies all items , purchase price terms, asset transfers, lease assignments, tax filings, employee notices, and regulatory approvals , that buyer and seller must complete before the sale date to finalize […]
How Vendor and Customer Contracts Transfer in a Business Sale
How Vendor and Customer Contracts Transfer in a Business Sale Quick Answer Vendor and customer contracts typically transfer through assignment (passing rights to the buyer while seller may retain some obligations), novation (all parties agree to release the seller and bind the buyer), or require consent from the counterparty before any transfer occurs. Most long-term […]