You should not commit to a major transaction, such as purchasing or selling a business, without preparing as best you can to minimize risk and potential complications. Take time to gather as much information as possible and weigh your options carefully before deciding. For safety’s sake, you have to at least be aware of the dangers you may be subjecting yourself to.

Both parties to a transaction – the buyer and the seller – want to feel like they’re walking away with what they paid for, even if it is just an innocent transaction between two parties. But sometimes in business, as in life, things go wrong, and at that point the agreement becomes a liability that’s used to interpret any circumstances favourably to a party’s point of view.

Right at the start of the business relationship, when the parties still trust and like each other, they don’t want to spend too much time on a contract, but contracts are good for the times when things go wrong. In this way, it is worth spending a little bit of money and getting legal advice to make sure that the parties’ true intentions are captured in the contract at the start to the point that it cannot be twisted or interpreted any other way at a later stage. Doing this would flip the meaning of the phrase to penny wise, pound foolish.

When it comes to jewellery, it’s similar to insurance: you purchase it, pay for it, but hope you never have to use it. And to keep these disasters from striking when you don’t need them, you want to make sure that your insurance policy gives you the protection you want and need. Weigh the following factors to evaluate a plan before you buy or sell.

Potential Buyer

Ensuring they are getting a fair value for their purchase, that is, obtaining the worth they paid for. To do this, a person must make sure that the elements of the business in question match the description provided by the seller.

Know exactly what the Seller means when he or she say that a certain turnover is made, as it may refer to a more expensive price for the product. Can it for instance be a greater possibility for a customer to cancel his or her order at a later date and thus the Buyer might end up paying more.

A factor to consider is the status of any unpaid for sales. The Seller may up the asking price for the business because of the new customers, but if payment hasn’t happened yet, the Buyer may never see the money.

A purchaser should check tax status, current business records, machine functionality, software, liquor licenses, and lawsuits against the business. This can be accomplished in the due diligence stage.

Individuals Selling Products.

Make sure that you do not prejudice the business by divulging sensitive information and end up with the sale not going through. To prevent this, request that the Buyer sign a confidentiality agreement to ensure that any business sensitive information is protected.

It’s vital to confirm that the Seller is going to make a purchase by receiving payment from a type of form of payment guarantee and deposit.

By setting up an appropriate indemnity in the transfer agreement and being clear about any warranties and making the potential buyer understand what transferring ownership of the business entails, it’s possible to prevent claims of wrongdoing later on.

In your final comments, it’s important to take into account the best business form for your enterprise – either a sole proprietorship, a partnership, a business trust, or a form of company according to the new Companies Act of 2008.

Under any of the above circumstances, one would be wise to seek legal advice from a lawyer to learn about their individual, specific circumstances