Selling a business takes more than finding a buyer and agreeing on a price. Buyers also want proof that the company has clear ownership, valid contracts and the right to use its property.
For business owners in Fairfax, Virginia, starting the legal review 24 months before a sale can help prevent delays. It also gives owners time to fix problems that might lower the company’s value.
Why review ownership records early?
Before buying a business, buyers often check who owns the company and whether anyone else has a claim to its shares.
Owners should review their capitalization table, or cap table. This record shows who holds shares or other ownership interests in the business. It may also reveal problems such as:
- Missing records of past share transfers
- Unclear ownership percentages
- Former employees who still hold stock options
- Agreements that limit the sale of ownership interests
These issues can lead to disputes or delay a sale. Therefore, owners should compare their records with shareholder agreements and other company documents.
Virginia’s Stock Corporation Act provides rules for corporations, including certain share transfers and mergers. However, different rules may apply to limited liability companies.
Why check property and intellectual property rights?
Ownership records are only part of the review. Buyers also want to know whether the company controls the assets it needs to operate.
For example, a business may use software, logos or designs that employees or outside contractors created. Without proper agreements, the company may not own all the rights it expects to sell.
Property agreements also deserve attention. A Fairfax business owner should review lease terms for landlord approval requirements, assignment limits and change-of-control clauses.
In addition, local zoning rules may affect how a buyer can use the property. A buyer who plans to expand or change operations may need further approval. Fairfax County and Fairfax City have separate zoning rules, so the property’s location matters.
Under the Fairfax County zoning rules, permitted uses depend on the property’s zoning district. Checking these limits early can help owners address concerns before buyers discover them.
Why start preparing two years ahead?
A 24-month timeline gives business owners room to review records, resolve disputes and update contracts before negotiations begin.
An attorney can help identify legal risks that might affect the sale price or the buyer’s willingness to proceed. Early legal guidance may also help owners choose a suitable sale structure and prepare for the buyer’s review.
While no timeline guarantees a successful sale, planning ahead can give Fairfax business owners more control over the process and reduce the chance of costly surprises.