Understanding the fine print when selling your business is crucial for navigating compliance with the law. 

In this guide, we’ll break down the key legal steps and decisions you should address when preparing to sell to ensure the smooth transfer of your business’s assets. Keep in mind that selling a business through Microns involves the sale of the business’s assets, which means selling the whole or parts of the company.

Confidentiality Agreement (NDA)

During negotiations, you’ll share commercially sensitive information with prospective buyers, so put an NDA in place before substantive discussions. A good NDA will define what information is confidential, state permitted uses, set an explicit time limit, contain carve-outs (e.g., information already public or independently developed), and address remedies for breaches. 

Prepare for Due Diligence

Due diligence is both a commercial and a legal process. Buyers will verify your financials and review legal risks. Conduct internal due diligence early to fix problems before buyers find them. Areas you should consider include:

• Financial records and tax filings (historical P&Ls and balance sheets)
• Contracts (customer and supplier)
• Employment and contractor arrangements (contracts, payroll records)
• Intellectual property (ownership, registrations, open-source compliance)
• Regulatory and licensing compliance (licences, permits, and registrations)
• Data protection (privacy policies)

Organize these documents in a virtual data room with consistent naming. Redact truly sensitive information when needed. Navigating due diligence is covered in more detail in another module.

Review Contracts and Agreements

Examine all commercial contracts and employment agreements for change-of-control, assignment, consent, or novation provisions. Some contracts may automatically terminate on transfer or require third-party consent; others may be freely assignable. 

For contracts that need consent, begin outreach early, as obtaining consent can be slow. Where written contracts are missing (which is common in small businesses), use the sale process as an opportunity to formalize agreements with employees and freelancers.

Employment and Contractor Issues

Ensure employee contracts include clear IP assignment, confidentiality, and appropriate post-termination agreements where legally permissible. Check payroll records and any collective bargaining issues. For contractors/freelancers, confirm that their status is correctly documented.

Intellectual Property and Third-party Code/Assets

Confirm that all core IP (code, designs, trademarks, domain names, data) is owned or properly licensed by you. For software, audit your repositories and dependency list for open-source licenses that might impose obligations or restrictions on transfer. 

Also, ensure all contributors (contractors, cofounders) have executed IP assignment or developer agreements. Update account ownerships (domain registrars, cloud providers, analytics, app stores) so the company, not an individual, controls critical accounts.

Head of Terms / Letter of Intent (LOI)

Once you and the buyer agree in principle, summarize the key commercial points in a Head of Terms or LOI: this will highlight the price, payment structure (cash, deferred, earn-out), exclusivity period, key conditions, and a proposed timetable. Clarify which clauses are binding (often confidentiality and exclusivity) and which are not.

Address Compliance and Regulatory Issues

Resolve outstanding compliance issues before closing. Typical items to check: licences and permits are current; corporate filings and tax returns are up to date; sales tax/VAT and payroll tax liabilities are reconciled; and privacy/data-protection practices comply with applicable laws (e.g., GDPR). 

If you handle personal data, ensure your Data Processing Agreements and privacy notices are in order and that you have lawful permission for processing. 

Drafting and Signing The Definitive Agreement

Finally, outline the transaction terms in an Asset Purchase Agreement (APA): our Offers platform can generate this document for you (this has been extensively discussed in the previous module). The document will cover:

• The purchase price and payment mechanics (if any)
• The list of assets being transferred 
• Seller and buyer representations and warranties (and time limits).
• Indemnities and liability caps (and exceptions such as fraud).
• Conditions precedent to closing (consents, third-party approvals).
• Closing mechanics and any post-closing adjustments (completion accounts).
• Post-closing obligations (e.g., transitional services, employment offers, non-competes).

Transaction Completion

To close the deal, both of you will transfer assets, documents and funds based on the agreement. Typical mechanics include delivery of assets, IP assignments, and any transitional services agreements. We encourage sellers to use our escrow service (Transfer by Microns) for a secure acquisition process.

Post-sale Support and Transition

We encourage sellers on our platform to offer a one-month post-sale support to guide the buyer on how to run the business operations. We’ve found that this transition plan increases buyer confidence. Some buyers may want to retain you after this period, but that’d be on a paid basis. 

Housekeeping

Before transfer, ensure you do the following:

• Consolidate or transfer administrator access to company accounts
• Update domain name and app store ownership records
• Provide an inventory of passwords and credentials via a secure password manager
• Create a transition checklist with dates 
• Preserve backups and archival copies of important records, consistent with the agreement.