The major steps involved in the sale of a business are:
- The letter of intent: the buyer outlines the terms and price you've informally agreed to in a written, nonbinding letter, and promises confidentiality so that you'll allow it to investigate your company further.
- Due diligence: the parties have a limited time period in which to investigate each other thoroughly, to see whether they will proceed with the deal.
- Purchase agreement: if due diligence turns up no nasty surprises, the parties' respective lawyers will hash out the details of the purchase agreement, any mortgages or financing between the parties, and any supplementary contracts such as noncompete or consulting contracts.
- State law requirements: state laws commonly require that the selling company's creditors be notified about the pending sale, so they can move to protect their interests. States may also require that corporate stockholders of the buyer and/or the seller vote on the transaction, that minority interests be cashed out, that the parties obtain tax certificates, transfer or buy business licenses, pay sales or transfer taxes, etc.
- Closing the deal: when all the details have been agreed upon, the parties will sign the contracts that transfer ownership, promissory notes, security interests, etc., as well as any documents required by third-party lenders; you get the down payment, the buyer gets possession of the business, and the transaction will be complete.