4 common mistakes in business asset sales in Louisiana

On Behalf of Dunlap Fiore, LLC |

Businesses decide to sell assets for a variety of reasons due to strategic, financial or operational considerations. Common reasons include financial restructuring, a focus on core competencies, market changes, or mergers and acquisitions.

When your business sells assets in Louisiana, navigate the process with precision to avoid common pitfalls that could jeopardize the transaction.

1. Making due diligence errors

One prevalent mistake is insufficient due diligence before initiating a business asset sale. Buyers must thoroughly examine the financial records, contracts and operational aspects of the business. Sellers, on the other hand, may overlook the importance of presenting a comprehensive and accurate picture of their assets. Failing to conduct or respond to due diligence adequately can result in disputes and legal complications down the line.

2. Neglecting regulatory compliance

Louisiana is home to about 471,240 small businesses, and they make up 99.5% of the state’s businesses. Louisiana, like any other state, has specific regulations governing business transactions. Ignoring or misunderstanding these regulations can lead to serious consequences. Compliance with state and local laws, permits and licenses is necessary.

3. Undervaluing intellectual property

Intellectual property such as patents, trademarks, copyrights and trade secrets, is often a significant component of a business’s value. However, failing to account for the true worth of intellectual property can result in missed opportunities for the seller.

4. Using incomplete contracts and agreements

Clear and comprehensive contracts are the foundation of a successful business asset sale. Incomplete or poorly drafted agreements can lead to misunderstandings and disputes. Both parties should enlist the expertise of professionals to ensure that they clearly outline and agree on all terms, conditions and obligations.

By taking certain steps, the parties can enhance the likelihood of a smooth and mutually beneficial transaction.