M&A Rules with Different States
It’s important to understand the M&A landscape.
Different states have different rules regarding business sales. For instance, Colorado has different rules than New York. The physicality of the business is what controls.
Sometimes deals can get intense when dealing with the sale of a business.
When someone is selling their business there are many things to consider. Some of the questions are as follows:
- Is it a stock sale or asset sale
- Is there a lease and if so is the landowner going to assign the lease
- Does this state have guidelines surrounding intermediaries
- Is there debt on the business and/or liens and encumbrances
- Are there licenses to run the business (which is typically defined by the state)
- Do they own the land or building or machinery? (Is that coming with the sale?)
So the natural position of the intermediary is: What rules affect a broker…
Usually there is no license to receive a commission when connecting a buyer and a seller of a business. Intermediaries need to make money.
However, A few states do require licenses to sell a business.
Those states are as follows:
- Illinois (Illinois does not actually require a license, but registration with the state securities commission is necessary.)
- South Dakota
We are licensed in FL, and have reps all across the country to ensure that we can get the business sold and the real estate either assigned or sold as well, whether that’s part of the deal or separate.
Very few deals get somewhere without intermediaries. Brokers are in the business of connecting people.
Their Rolodex is bigger than a person trying to sell their business is, when it comes to people who are in the market to buy businesses (generally speaking). Brokers also are savvy to know how to piece a deal together when many deals fail
A buyer and seller left to themselves may let a deal get mucked up by themselves because the buyer/seller are not familiar with putting together this type of larger deal with due diligence, or attorneys constructing the paperwork, because it is a specific type of purchase & sale that needs a very specific attorney.
Many sellers are emotional and need comfort when a buyer takes a long time to submit an LOI, asks a lot of questions, has concerns during the process, or just prolongs certain steps longer than needed.
Often, buyers and sellers need guidance, regardless of how many deals the buyer or seller has done outside the industry. So, if you feel you can construct a big deal yourself without M&A experience you may be able to but often times it’s more complicated than that
A buyer who is savvy might feel you can be taken advantage of with no representation. Or might not be interested because it seems not far enough along. But with adequate representation, it gives you and your business credence.
Or an inexperienced buyer might not know the lay of the land when it comes to acquiring a deal
And they might draw up paperwork that can leave you vulnerable
You want experienced pros guiding you to a successful exit.
Contact JARBLY to help you with your business sale and these particulars when dealing with different states.
Call us at (800) 773-1523
Or Email us at [email protected]
We have representatives all over who are experienced in representing the selling and buying of businesses.
Leader in Acquisitions with Expertise in Representing Sellers & Buyers on Deals
Jarbly is a leader in acquisitions with expertise in helping with listings, negotiations, LOI's, asset purchases, company purchases, and real estate purchases. JARBLY has access to high net worth individuals if you are on the sell-side and businesses that may be of interest to you if you are on the buy-side.
- Phone: (800) 773-1523
- Email: [email protected]