In July 2024, we hosted our first webinar in conjunction with Acquiring Minds. We gave a short presentation on the do’s and don’ts of the LOI and then answered questions from the audience.
Question Timestamps
- 09:54: How should the purchase price and working capital be addressed in the LOI?
- 11:33: What are the best practices for handling key employees and non-compete agreements?
- 12:06: Is there a way to legally protect against key employee risk?
- 15:40: What are the pros and cons of stock purchases versus asset purchases?
- 17:12: Are there any best practices for limiting liability when opting for a stock purchase?
- 19:37: How should exclusivity and the basis of valuation be addressed in the LOI?
- 21:20: What are the risks and benefits of specifying the basis of valuation in the LOI?
- 24:18: Is it a red flag if a seller won’t allow you to talk to key employees in advance? Or are there deals where buyers proceed despite this issue?
- 27:52: What are the legal implications of offering a hard money deposit in the LOI?
- 28:50: What essential questions should be asked pre-LOI to strengthen your LOI strategy? Given the competitiveness of the market and sellers’ tendencies to minimize upfront discussions, how can you balance thoroughness with efficiency?
- 31:48: If you need to back out of an LOI after initial financial due diligence reveals poor numbers, what should a buyer be mindful of to avoid legal issues? Are there any risks, even though LOIs are non-binding?
- 34:00: Should a searcher involve their attorney when drafting the LOI?
- 35:33: Can the IRS still pursue the buyer for tax liabilities incurred by the business through the assets?
- 37:52: Can you elaborate on your flat fee structure for legal services?
- 41:59: Under what situations does it make sense, or is it necessary, to have a lawyer from the same state as the target business?
- 45:56: Are there specific states that are more complex or prone to legal issues post-purchase, such as California?
- 47:31: Are state and local tax clearance letters typically included as stipulations in the LOI?
- 49:47: How important is the Quality of Earnings (QOE) report?
- 1:01:12: What are the key legal considerations when buying a licensed business, such as in the home services industry?
- 1:04:51: Are license holders key persons and how do you incentivize them to stay?
- 1:06:45: Can you provide a quick definition of IRS sections 330, 8H, and 10?
- 1:09:19: How have recent changes to SBA loan rules impacted sellers’ ability to retain equity in the business post-acquisition?
- 1:13:54: If seller note forgiveness is triggered, is it considered a taxable event for the company?
- 1:14:49: Are there legal ways to structure ownership or financing to avoid the SBA’s 20% personal guarantee threshold, or is that generally not advisable?
Workshop Handout
If you want a copy of the one pager we prepared for the presentation and provided to attendees, click the button below and we’ll email it to you.
If you need further assistance or are in the process of negotiating a letter of intent, contact us at info@barlowwilliams.law and we will be happy to discuss your situation.