Selling a business? What's the legal perspective?

Your question is extremely broad, and the answers to your questions will depends on so many factors (what is the value of the business, location, assets, inventory, customer base/customer lists, property, location of business, manner of ownership, etc. The best advice would be to find an attorney to provide you with the legal pointers and counsel you are seeking.

From the FAQ section of my website:

"A small business is normally sold by asset sale, stock sale, or merger, with asset sale being the overwhelming vehicle of choice for most small businesses.

Sometimes this can be done via a basically canned process by listing through a business broker who will work as appropriate with others to provide for all the formalities. In that case, you get a homogenized process that may or may not suit your needs.

Best is to get legal or accounting advice on how to structure the sale and then work with your prospective buyer to get the basic ideas behind the deal documented in a term sheet or letter of intent - this is not a legally binding document but gives you a framework on which to proceed with further steps. It is also not legally required - if you prefer, you can skip right to a formal contract.

The formal contract is a form of purchase agreement. It normally contains covenants or promises (I will sell to you and you will buy from x assets or x stock shares, etc.), warranties and representations (as seller, I warrant and represent that I have good title to what I am selling you and that there are no liens on it and no lawsuits against it, etc.), and conditions to closing (our deal with close only at such time as x, y, and z conditions are met, as for example getting a landlord's consent to assignment of a lease associated with the business).

The contract is normally signed and an escrow established as a mechanism by which to get to a closing where the sale will be consummated. Though the issues are quite different in many ways, such an escrow works procedurally much like those set up when a home is sold, except that (for example) instead of waiting for the results for a title search you may be waiting for the approval of a transfer of a liquor license, etc.

Due diligence is a critical part of this process, mostly on the part of the buyer. This is the process by which a buyer inspects the books and records of the business being sold and takes other steps to ensure that what is being sold is authentic and worth the value being paid for it. Lawyers and accountants are often brought in to assist with this process. Such due diligence can be done either before or after a formal contract is signed or it can be done in stages - limited due diligence prior to signing a letter of intent followed by extensive due diligence following the contract signing during the escrow period. It is often a condition to the closing of escrow that the buyer is satisfied with the results of due diligence. Due diligence should normally not be allowed until the buyer has signed a confidentiality agreement.

Many traps and pitfalls can arise during a proposed sale. Sometimes a buyer will say he wants to buy your business only to gain access to key information about it to use it competitively against you. There are formal legal mechanisms to help protect against this, the most important being a confidentiality agreement. These might be only a cold comfort to you if the main thing you wind up with is a lawsuit. Be discerning in choosing the persons with whom you deal.

Another common tool is a no-shop agreement, which your buyer might insist upon. No buyer wants to make a bid only to have his seller use it to shop for a higher price or for better terms.

Another major issue is tax. A stock sale will have very different tax consequences from an asset sale, some favoring a seller and some favoring a buyer. Don't ignore these - they are often the most important part of a deal. In more sophisticated deals, tax-free deals are also done via reorganizations.

All of the above barely scratches the surface of issues and strategies that go into the process of selling a business. You should consult with a knowledgeable lawyer to handle these issues."

Hope this helps give you at least a broad picture of factors to consider. From your question, the "easiest" way might be a canned broker process - it may not be the best way.