Why is it beneficial to review contracts and documentation before putting a company up for sale?
Contracts are typically considered assets, such as agreements that lock in suppliers of goods and services for extended periods of time at favorable pricing. However, contracts can also be liabilities, like a longterm agreement to supply a substantial customer with goods and services at less than a company’s standard profit margin. Existing contracts could also be obstacles to completing a sale. Many written contracts provide that neither party may assign the contract without the prior written consent of the other party. If the supplier, vendor or customer will not consent to the assignment or requests additional financial concessions or accommodations, the buyer may reduce the purchase price or make the sale contingent upon receiving the consent. If the seller proceeds with the transaction without assigning the contract and after the sale has no ability to perform the contract, the seller may be liable for damages for breach of contract. If a business decides to structure the transact
