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Making and evaluating offers

After a buyer has investigated a number of companies, they will then make an offer. An offer may take the form of a purchase and sale agreement or a letter of intent. Although they have different names, the two documents serve the same purpose; both are means of documenting a buyer’s expression of interest.

Regardless of which form of documentation is used, it should contain the following:

The purchase and sales agreement is a complex document and it is essential to get professional help in drafting it.

When evaluating an offer the seller should look for the same provisions in the agreement document. A seller should also ask for a resume and a financial statement from the potential buyer. Great potential buyers are those who:

It is also important for a seller to carefully study the offer in order to determine what assets and liabilities are being purchased. An offer for the assets of a business may be worth considerably less than an offer for its stock, even though the price offered for its stock is considerably higher.