A contingency in the sale of a business is a condition in the contract of sale or offer that must be resolved, satisfied or rectified by either a buyer or seller. If they are not satisfied then the sale will generally not go forward. Most offers on a business contain one or more contingencies. The sale may be subject to the buyer obtaining financing, or the seller repaving the parking lot. Experienced business brokers have seen just about every contingency thereis. Most of these are placed in the offer by a buyer who has concerns about
one or more issue and needs it or them to be satisfied before proceeding with
or closing the sale.
It may be as simple as the sale is contingent upon the buyer receiving a five-year extension of the lease by [a certain date]. Or, the offer to purchase may state that the sale is conditional upon the buyer’s approval of the seller’s books and records.
The difference between the two examples is that in the first one, it is a specific event that must be satisfied, and a time limit is specified. The second example is open-ended, meaning that a buyer could opt out of the deal by disapproving the books and records essentially for any reason.
Contingencies come in all sizes and shapes. Very few offers don’t contain at least one, and usually more than one. They are an inevitable part of selling – and buying a business. A business broker knows what is reasonable and what is not.
Less than 20% of business entities (a little less than 5 million firms) had paid employees, and these firms accounted for nearly 98% of total revenue – the other 19 million plus businesses with no employees accounted for less than 2% of total U.S. revenue. Firms with more than 500 employees represented less than Â½ of one 1 percent of all employer firms, but accounted for about 50% of total U.S. employment.
Cooper City Office
10620 Griffin Rd B-105,
Cooper City, Fl 33328
4720 NW Boca Raton Blvd,
(NW 2nd Ave) D-103
Boca Raton, Fl 33431