Fourth Thing You Need to Consider Before Merging.

Avoid Crucial Mistakes.

Before negotiating and signing a letter of intent, seek legal and accounting advice. According to Breland, a seemingly “non-binding” letter of intent often includes binding provisions that can cause difficulties when negotiating the definitive agreement. When a letter of intent includes language such as “best efforts” and “good faith,” the parties are leaving it up to a judge or jury to interpret what that means.

A few years ago, says Breland, a large company was hit with a multi-million dollar breach of contract judgment when it backed out of a potential acquisition. The letter of intent included language that each party would use its “best efforts” to consummate the transaction, and when the buyer backed out, the seller filed suit, arguing that it failed to use its best efforts to complete the deal. Pay attention to confidentiality/non-disclosure provisions. These provisions can seem “boilerplate”, explains Breland, but sometimes each party may have obligations to identify or mark information that is disclosed, and if some disclosed information is inadvertently not marked as “confidential,” the other side may be able to use it freely.

Make sure too, that post-closing issues, such as permit or license transfers, vehicle re-registrations, and new employee contracts, do not get lost in the excitement of the deal closing, says Breland.

Read the full article at: http://blog.intuit.com/money/5-things-you-need-to-know-before-merging/

Patty Block, President and Founder of The Block Group, established her company to advocate for women-owned businesses, helping them position their companies for strategic growth. Charting the course for impactful, sustainable, profitable businesses, the beacon is control: of your strategic direction, your money, your time, your staffing, and your ability to bring in business. The Block Group brings together the people, resources and ideas that build results.

Business management consultant in Houston TX.

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