So you've got your eye on buying a business. Or you’re ready to sell your own company to someone else. Whichever side you’re on, buyer and seller are both on board and ready to move forward with the sale. You’ve even drafted a Letter of Intent to demonstrate that you’re serious about the business purchase transaction.
An LOI is a great place to start the process of selling or buying a business. But it's far from the only document you'll need to finalize the sale.
You must make sure to cross your t’s and dot your i’s in a business sale. The process of transferring ownership will go much smoother if you cover all your bases.
But what documents do you need?
Your needs will change depending on your industry and the particulars of the business for sale. The best way to make sure you’ve addressed all your issues is to speak to a local Philadelphia business attorney who can help you with your unique transaction.
Business sales involve risks. It’s natural for both buyers and sellers to have hopes and apprehensions about a merger or sale. A business purchase negotiation requires trust between a buyer and seller as they work to come to an agreement.
A Letter of Intent (LOI) is a crucial part of a successful business sale. An LOI acts as an informal way to kick off a negotiation between a buyer and seller in a business purchase transaction.
Your Letter of Intent essentially “sets the stage” for your business purchase. The LOI terms will clarify the expectations of both sides going into the purchase. Whether you're the buyer or the seller in the sale, both parties benefit from drafting an LOI early on in the process.
Because an LOI is the first step in the business purchase process, you want to start on the right foot. That means you want to get an attorney involved to help draft the LOI for you.
Drafting a Letter of Intent on your own could lead to mistakes down the road. At Holmes Business Law, we often get clients who’ve already drafted Letters of Intent with unfavorable terms. These terms are harder to undo compared to getting them right the first time around.
Our experienced lawyers help companies with business sales every day. Call our Philadelphia area offices now at 215-482-0285 to get your business purchase transaction on the right track.
What’s a Letter of Intent When Selling or Buying a Business?Letters of Intent (sometimes called Memorandum of Understanding) are often non-binding under the law. But many courts will uphold or at least consider their terms in the case of a dispute – especially if there are no other legally binding documents. The parties may also choose to make the terms binding if they’d like.
Think of an LOI as an agreement to agree, setting out the path for your sale.
A Letter of Intent is a way to move the business purchase transaction forward. An LOI signals between buyer and seller that both parties are serious about negotiating a sale. Don’t let the informal nature of the agreement fool you – the terms you agree to now lay down the groundwork for the ultimate outcome of your business sale.
A Letter of Intent comes into play after:
At that point, the buyer will submit their business purchase Letter of Intent to the seller. Both sides should have legal counsel to help them negotiate the terms before signing.
If your Letter of Intent is non-binding, it can be overruled in a court of law by other executed contracts or documents that have greater legal authority.
What Needs to Be Included in a Letter of Intent?From a buyer’s point of view, a Letter of Intent expresses the terms under which you’re willing to buy the business. Think of it as the first volley in a negotiation.
A Letter of Intent should set out the following terms:
Contingencies lay out what the buyer expects to happen before they’re ready to close the purchase. That could mean obtaining a commercial lease, securing additional financing, or providing the buyer with the necessary tax documents to determine profitability.
An LOI may seem straightforward, but you should beware of some tricky parts. For example, some brokers may not want to return the buyer’s deposit if they decide to back out of the purchase for any reason that’s not based on the contingencies in the LOI. You must make sure that the proper wording is included in the deposit language in the letter.
If you’re looking to buy a business, you should have a lawyer draft the LOI for you. A lawyer can anticipate any potential issues and include terms for them in the language of the letter.
If you’re selling a business, you should have a business lawyer look over the terms of any Letters of Intent you receive from potential buyers. If you fail to consult an attorney, you may end up giving up certain rights in the letter, leading to losses down the road.
Negotiating Your Letter of IntentEven though the buyer starts by preparing the Letter of Intent, the seller must respond to protect their interests in their company. The business purchase negotiation process begins with the LOI.
Whether you’re on the drafting side or the responding side, you need a business lawyer to help negotiate the terms that could end up defining your business sale. It’s especially important to involve an attorney early in the process – ideally as early as possible.
When buyers write their own Letter of Intent without consulting a lawyer, they often include terms that hurt their bottom line without realizing it. And once the LOI has been sent to the seller, whatever terms are included become harder to change. So you want to talk to a lawyer before you send your LOI if possible.
In fact, the earlier you get a lawyer involved in the LOI drafting process, the better a deal we can negotiate for you. At Holmes Business Law, our experienced lawyers can draft or negotiate your LOI with all the terms you need to make a successful sale.
Call our Philadelphia offices today at 215-482-0285 to get started with our legal team.
If you’re in the business of selling products, Amazon's marketplace is an incredible platform that makes it possible for you to reach millions of potential buyers online. You can take advantage of Amazon’s consumer base and fast shipping for a small commission from each sale you make.
It's no surprise then that Amazon is so popular with third-party retailers and independent sellers. But the platform’s popularity also makes it a common target for counterfeiters and listing hijackers who pass off fake brand products as the real thing.
The Amazon Brand Registry was created to solve the problem of counterfeit listings. The ABR connects branded products to their authentic sellers, protecting both sellers (from lost sales to counterfeits) and consumers (from buying counterfeit goods). Sellers who join the Amazon Brand Registry get the benefit of brand protection on Amazon’s website.
The problem? You need a federally registered trademark to join the Amazon Brand Registry.
A federal trademark registration establishes the legal presumption that:
Holmes Business Law offers trademark registration services tailored to the needs of Amazon sellers. Call our offices now at 215-482-0285 to get started on the right track.
What Is the Amazon Brand Registry?The Amazon Brand Registry grants you exclusive tools to protect and promote your brand on the Amazon market. If you join with a valid trademark, you get:
Can You Sell on Amazon Without Brand Registry?Yes, but you would be hamstrung by a number of challenges. Without the protection and support of an Amazon Brand Registry account, you face an uphill battle to success.
Aside from the protection you get with a Brand Registry account, it’s also the only way to access Amazon’s advanced Seller Central features to upgrade your product listings.
If you're trying to build a long-term business or brand, a trademark is critical to establishing your value in the market. Most savvy consumers know that Amazon has problems with counterfeit and fake products. With Brand Registry, you get a presumption of trust. Potential customers can count on you as a legitimate business that’s invested in its products.
In addition, with a Brand Registry account, you can use Enhanced Brand Content to control how your listings look. Meanwhile, Amazon keeps updating the features available for Brand Registry sellers, with new improvements and tools coming out all the time.
With just a trademark, you get protection from product infringement and access to more of Amazon’s powerful selling tools. There are so many opportunistic competitors on Amazon’s platform that will try to piggyback on the success of a brand gaining popularity. With Brand Registry, you can protect yourself and your customers from copycats.
Trademark Registration for Amazon SellersOnly a valid trademark registered with the U.S. Patent and Trademark Office (USPTO) can get you into Amazon’s Brand Registry. Unregistered trademarks don’t count, no matter how long you've been using your logo or brand name to conduct business.
What’s the U.S. Trademark Registration Process?The USPTO trademark registration process can take 9 months or longer between filing your application and receiving your trademark registration certificate.
The formal trademark registration process has 4 steps:
Once you receive your trademark registration certificate at the end of the process, you can enroll in the Amazon Brand Registry. That involves:
When Should You File for a Trademark?The sooner the better. You can even file for a trademark before you start selling products on the market, with an “intent to use” application. If you’re selling products on the market now, you can and should file a trademark application as soon as possible.
What if you can’t wait 9 months? What if someone is already counterfeiting your goods now?
You can speed up the trademark registration process by filing a Petition to Make Special with the USPTO. With this petition, you could speed up the time it takes for an examining attorney to get to your application – from 3 months to 1 month or less.
If you fail to register your trademark and someone else registers it instead, you could lose your entire brand to Amazon counterfeiters. It’s a heartbreaking reality when it happens to business owners, and you can avoid it by getting a trademark sooner rather than later.
The lawyers at Holmes Business Law can help you position your Amazon business for success. Call our offices now at 215-482-0285 to get started.
You can also download our PDF resource for Amazon sellers: How to Pick the Right Trademark Class for Amazon Sellers (eBook)
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way. When you're looking for a business lawyer in Philadelphia, the Main Line or New Jersey, we can help.