It never fails but in almost every deal a buyer or a buyers attorney fixates on “contracts” and the assignability of the contracts in a deal. Now I have spoken to several attorneys I respect on the issue here in Florida and most smaller businesses realize that the cost of litigating to enforce a contract is so damn prohibitive that it’s really an issue of some impracticality.
Buyers want assurances that what they are buying will stick with them during the transition and will produce the revenue to support the income they are buying. I get it and its understandable and sellers need to understand it too. Is it much the same argument as the “guarantee” scene in Tommy Boy? Yes….and if you have not seen that take a moment to watch this:
No matter the futility of the question a business owner should do the following:
- Hedge risk by having no revenue concentration and more customers than less is best.
- Go ahead and put a clause of assignability in your contracts or service agreements (have your lawyer write some language up and have it reviewed)
- Along with that put some language as to curing issues when they are raised in your agreements….if you do not know what that means…ask your attorney.
Michael Shea P.A. is the leading business broker for Transworld Business Advisors in Central Florida. With over 323 deals sold he is the right guy to sell your business. He may be reached at 321-287-0349 or email him at email@example.com