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An asset purchase agreement crossed my desk recently with a provision that allowed the buyer to post a notice on the door that there was a pending transfer of the business.   Also included in buyer’s proposed purchase agreement was a provision obligating seller to maintain all customers, vendors, and employees against that threat that the buyer could terminate the contract.

Upon review, it appeared that the buyer was setting the seller up to force the seller out of business so that buyer did not actually have to pay any money to eliminate its competitor. It is critically important that confidentiality be maintained during the pendency of the transaction.  There are many ways to do this:

  • Prior to discussions on the drafting of the transaction documents, execute a non-disclosure, confidentiality, and non-circumvention agreement;
  • Set rules on the buyer’s visitations to the business, as it will become clear to employees that something is up if the same “suits” walk in weekly/monthly; and
  • Consider setting up separate email accounts and fax accounts for the transmission of confidential documents between your team (lawyer, accountant, and financial planner) and you as the principal seller of the business.

By Guest Blogger  Mary Drury, Esq.

 

About the Author

Jay Young is a Las Vegas, Nevada attorney. His practice focuses on acting as an Arbitrator and Mediator.

Mr. Young can be reached at 702.667.4868 or at jay@h2law.com.

The information provided on this site does not, and is not intended to constitute legal advice. You understand each legal matter should be considered to be unique and subject to varying results. You should not take or refrain from taking action based on any information contained on this website without first consulting legal counsel, as it is not intended to advise you on your particular matter. Further, you understand that no guarantee is given that the information contained herein is an accurate statement of the law at any given point in time, as the law is constantly changing. Please see http://nevadalaw.info/disclaimer

 

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