Law

You Need a Legal Expert When Selling Your Business

For any business owner, selling your company can be an intimidating process. There are going to be numerous personal and legal matters that you will need to settle before you sign an agreement of purchase and sale. With the guidance of a legal expert, you can make sure the sale goes smoothly, that you have mitigated your risks and liabilities, and that you qualify for the lifetime capital gains exemption.

One of the first things that you should dois a valuation. A legal expert at a trusted firm like Dwek Law will help you bring in a neutral third party providing a valuation of the business. It provides a solid baseline for negotiations and structuring the transaction. Your expert will be able to look at similar sales of like businesses in the Toronto area that will affect the price. The valuation often reveals areas of opportunity or value that you never realized existed before. Sometimes people are not sure of what they have and an expert will help reveal that hidden value. You may also need help removing or implementing hold companies and regulations that you will have to follow to maximize your tax exemptions. For example, did you know that to qualify for the lifetime capital gains exemption, you must remove or spinoff inactive assets two years before the sale.

A legal expert can help you optimize your sale price and take the regulatory precautions necessary to keep the buyer from negotiating down. For example, in order to qualify for the lifetime capital gains exemption, the company must be sold off through shares rather than assets. If the owner does not have proof of regulatory compliance, buyers will either insist on an assets sale or a lower price on a shares sale. Solicitors in Toronto like Dwek Law handle lifetime capital gains exemptions on a daily basis. They will tell you that much of the final sales price has more to do with preparation and structure than the value of your assets.

A business lawyer that specializes in mergers and acquisition, such as Toronto's Dwek Law, can help you structure a transaction to maximize your return. A knowledgeable attorney can guide you through the process of qualifying for the $800,000 capital gains exemption, using your spouse or children's exemptions to multiply the savings, or using capital losses to reduce your tax bill at the end of the transaction. A share sale gives owners a clear exit, whereas the owner will still have to dissolve his corporation if he simply sold its assets.

Finally, there is going to be a closing date when the business officially changes hand. A legal expert executes the due diligence to make sure that the owner will not walk away with undue liability, and negotiate a fair payment structure. Often owners do not get the full price on closing, and an attorney helps them secure the full amount withstanding. They can help cover every detail, and document the transaction. If the process of payment goes through escrow, the transaction documentation is a valuable reference material when problems arise. Hire a qualified business lawyer to secure the full amount of the agreed on purchase price.

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