This is a YouTube video titled "Legal Process - MicroAcquire - Startup Acquisition Marketplace" containing an English informational talk recorded on January 8, 2022. The speaker explains the six legal stages of acquiring a startup, covering topics such as letters of intent, NDAs, due diligence, purchase agreements, payment terms, local laws, shareholder considerations, and transfer of ownership. The content is educational and aimed at startup founders or buyers navigating acquisitions.
What to expect from the six legal stages of an acquisition. A letter of intent. So this is really the first sign that a buyer is serious about potentially acquiring your startup. And really with this, you might want to also include an NDA. I highly recommend speaking to an M and A attorney, which you can find on Microacquire, and really figuring out what is most appropriate as you're going through an acquisition. But typically, NDA first and then letter of intent is kind of the first serious piece of legal document that will include terms such as the purchase price, due diligence, what is the initial payment, is there an exclusivity period? What are your transition like? There's so many details you can include in the letter of intent. The next step is due diligence, which is basically an audit of your company on steroids. So the buyer is going to go through everything from your metrics to your IP to your speak to your staff, potentially look at any debts. Like, it can be a very, very lengthy process. So some private equity firms and some buyers will move really, really quick. The purchase agreement. This is basically where you're basically going to sell your business. So once you sign this, typically you've sold your business. And so whatever terms that you've agreed upon are going to be executed in this document. I highly recommend having a legal attorney review this document. I do not recommend signing a purchase agreement without an attorney. At least just taking a look at it like one, two hours of work. You can go on up counsel, you can go on Microquire into the legal area and just ask if you can have a quick review of the purchase. Agree just to make sure that everything is in order. It could stand in legal court if something goes terribly wrong. Buyer payment terms. This is also things to discuss as you're moving forward in the acquisition. What are the terms? Is it cash up front? Is it seller financing? Is there equity involved? Whatever it may be, this will be worked into the purchase agreement. You also want to be aware of local laws. Sometimes there's local regulations that might halt or delay your sale, again, depending on the size of the business. Also, you got to think about your shareholders. What are you going to pay for taxes? Do you have any debt on the business? And so clearing all that stuff up before you sell the business is usually required by a buyer. And then you're going to move into transfer of ownership. So this is where you're transferring all the assets, everything that you essentially use to run your business. And you're going to now be transitioning the business over to the new buyer so they can start running it.
