This article addresses high level considerations for a general purchase and sale of a business. It does not cover mergers, public company transactions, or complex corporate reorganizations.
Buying or selling a business is one of the most significant financial events most entrepreneurs will ever experience. Yet many first-time buyers and sellers are surprised by how structured—and how involved—the legal process really is.
While every transaction is unique, most private company acquisitions follow a predictable legal and commercial path. Understanding that path at the outset can dramatically reduce surprises, costs, and frustration later.
Below is a practical overview of what clients should expect when engaging a lawyer for a business purchase or sale.
Step One: Establishing the Transaction Framework
The process typically begins well before any documents are signed. At this stage, your lawyer’s role is to help you understand:
How the transaction will be structured
What documents will be required
Who else should be involved
What the timeline and cost profile is likely to look like
A typical acquisition or sale involves more than just lawyers. Depending on the size and complexity of the deal, you may also need:
A CPA or tax advisor to analyze tax treatment and financial risks
A financial advisor or broker to assist with valuation and deal structuring
An escrow agent to safely handle funds and closing deliverables
Most transactions close in 30 to 180 days. On the sell-side, total professional fees typically range from 1% to 6% of the purchase price, driven largely by complexity, diligence intensity, and whether a broker is involved. Getting aligned on expectations at the outset avoids costly course corrections later.
Step Two: The NDA and Letter of Intent
Once buyer and seller are ready to engage, the first legal document is almost always a Non-Disclosure Agreement (NDA). This allows both parties to exchange sensitive financial, operational, and strategic information without fear it will be misused.
From there, the parties negotiate and sign a Letter of Intent (LOI). While usually non-binding, the LOI is one of the most important documents in the deal because it sets the economic and structural roadmap.
A well-drafted LOI often may include, but is not limited to:
Purchase price and payment terms
(cash at closing, deferred payments, seller notes, etc.)Equity in lieu of cash
(rollover equity or ownership retained by the seller)Earn-outs
(future payments tied to post-closing performance)Stock vs. asset purchase
(which determines tax treatment and liability allocation)Due diligence scope and timing
Key employees
(who must stay or sign new agreements for the deal to close)Non-compete and non-solicitation terms
Tail insurance
(extended coverage for pre-closing claims)Exclusivity
(a period during which the seller cannot shop the deal)
A clear LOI prevents misunderstandings and keeps the transaction focused once the real work begins.
Step Three: Due Diligence and Transaction Documents
After the LOI is signed, the buyer’s legal team typically drafts the definitive transaction agreements while diligence begins in parallel.
Due Diligence
The buyer will review nearly every aspect of the business, including:
Legal compliance
(corporate records, contracts, litigation, IP, employment)Financial and tax records
Commercial activity and market position
Operations
(management team, supply chain, technology, and systems)
The goal is to confirm that what the buyer believes it is purchasing matches reality—and to identify risks that need to be priced, fixed, or insured.
Representations, Warranties, and Disclosure Schedules
One of the most important legal protections for a buyer comes through the seller’s representations and warranties—statements about the condition of the business, such as:
The company is in legal compliance
Financial statements are accurate
There are no undisclosed lawsuits
The company owns its intellectual property
The disclosure schedule then lists all exceptions and qualifications to those statements. Together, these documents give the buyer a complete, legally binding picture of what it is acquiring.
If something later turns out to be false or omitted, these provisions determine whether the buyer has a claim for indemnification.
Closing the Deal
Once diligence is complete and documents are finalized, the parties move to closing. Funds flow through escrow, ownership transfers, and post-closing obligations—such as earn-outs, employment agreements, non-compete obligations, and transition services—begin.
Final Thoughts
Buying or selling a business is not just a financial transaction—it is a legal transfer of risk, assets, people, and future opportunity. A disciplined process, guided by experienced advisors, is what turns a signed deal into a successful outcome.
Understanding the roadmap before you begin is the best way to stay in control of the journey.
Archetype Legal PC is happy to assess, and help you understand and navigate the process of buying and selling a business. Feel free to reach out to us via hello@archetypelegal.com if there is any assistance we can supply on this matter, or any others.
Disclaimer: This post discusses a general legal topic, is intended to serve as informational only, and may not reflect the most current legal parameters in your jurisdiction. This informational post is not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction. Archetype Legal PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this post.
