Buying and selling businesses in NYS

When business owners in New York want to buy or sell a company, they each go through five steps to complete the transaction. While mostly the same, the buyer and the seller conduct each stage in a different manner and perhaps on different schedules.

As a result, while the buyer is completing a tsk in one stage, the seller may be completing a different one… or they might be applying a different focus to the same task, which takes more time and resources. Nonetheless, the buyer and seller each must be fully prepared for each stage to be successful in the sale or purchase of a business.

Stage 1: Preparing the Business for Sale.

The buyer’s goals here include meeting with their advisors and business attorney. It also entails meeting the business owners. A seller prepares at this stage by pinpointing weaknesses within their business that the buyer could leverage to drive down the value of the company. Sound preparation lets business owners have the time to strengthen or eliminate their weaknesses. This will result in getting the maximize the value for their business.

Stage 2: The Buyer List.

A buyer must create the investment criteria that they will share with their advisors. At a minimum, this information must include revenue, EBITDA (earnings before interest, taxes, depreciation, and amortization), industry, and location. The seller will be working with an investment banker who can create a potential buyer list for the company. In addition, a seller should consider the type of buyer they think will be a good fit for their company—which may include considering competitors, customers, vendors and others within complimentary industries.

Stage 3: Letter of Intent.

A letter of intent (LOI) is an initial agreement between the buyer and seller that describes the basic terms and conditions of the transaction. This is typically non-binding. With a LOI, a buyer is trying to be somewhat general—this gives him or her flexibility to renegotiate the purchase agreement if unfavorable information is found during the due diligence stage. In contrast, the seller will have an exact opposite focus from the buyer. The seller wants the buyer to get rid of any vague language and terms and conditions that can be misinterpreted. The seller wants clear terms and conditions to limit disagreements and possible renegotiations when drafting the purchase agreement in Stage 5. The leverage moves from seller to buyer once the letter of intent is signed because there’s no longer any competition for the business during that stage.

Stage 4: Due Diligence.

This is the point in the process when the buyer can validate the information provided by the seller. This stage is time-sensitive and usually doesn’t exceed more than 90 days. As a result, the buyer must act fast after the LOI is signed. The seller will be working on completing their sell-side due diligence to uncover any concealed issues or problems with the business, although this really should’ve been accomplished in stage one, so there are no delays for the closing.

Stage 5: Closing the Transaction.

The buyer must fully understand the terms and conditions in the purchase agreement. This includes knowing how a specific term may influence the purchase price. In addition to understanding the terms and conditions, the seller should be preparing for the transition period and life without their business.

One of the critical documents at this stage is an asset purchase agreement (APA), which is a definitive agreement that finalizes all terms and conditions in the purchase and sale of a company's assets. It’s different from a stock purchase agreement (SPA) where company shares, including title to the assets and liabilities, are being bought or sold.

The buyer and seller each complete the same five stages when selling and buying a business, but they have different goals and tasks during the stages. However, they share the main objective of ensuring a successful transaction.


At each of the stages, a New York small business owner is best served by having an experienced business attorney at your side. Remember, you have one chance to sell your business. Do it right.

For More Information

Small Business Exit Planning and Succession Guide

The Ins and Outs of Selling Your New York Small Business

Selling Your Small Business in New York

5 Tips for Business Owners When Selling Your Small Business

Exiting A Franchise

Francine E. Love is the Founder & Managing Attorney at LOVE LAW FIRM, PLLC which dedicates its practice to serving entrepreneurs, start-ups and small businesses. The opinions expressed are those of the author. This article is for general information purposes and is not intended to be and should not be taken as legal advice. 


Francine E. Love
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Founder and Managing Attorney at Love Law Firm, PLLC which dedicates its practice to New York business law