Q. I am selling my accounts only, and I am having a problem with the buyer. I would like to close the deal and then hand over my account list to the buyer. But he wants a copy of my customer list before closing so he can input the data into his system. Is there a way to resolve this dilemma? I don’t want to lose the sale.
A. This dilemma has plagued many transactions. A seller is apprehensive about prematurely giving up the account list because that is his main asset. If the deal falls apart, the seller does not want a potential competitor having the client list. On the other hand, receiving the customer account list after closing can cause problems for the buyer. The buyer may have to hire the seller’s staff to answer the calls as accounts are being transferred to the buyer’s call center. The buyer may also need to bring his staff over to the seller’s call center to answer the calls even though they are not familiar with the seller’s equipment or accounts.
The “Satisfaction of Due Diligence” document devised by my wife, Christine, states that the buyer has done their due diligence and is ready and financially able to purchase the business. Once this document has been signed by both buyer and seller, the account information can be transferred to the buyer prior to closing, enabling the buyer to answer the account calls after the business has been purchased. Thus, on the closing day the phone lines can be transferred to the buyer with staff present in both the seller and buyer’s offices to assist with the transfer. The buyer may also wish to hire some of the seller’s agents and can determine this prior to closing.
For the protection of the seller, the agreement states that if for any reason the deal is not consummated, the buyer cannot solicit any of the seller’s customers for a period of five years. If by chance one of the seller’s accounts goes with the buyer within that period, the buyer will pay for that account with the multiple agreed upon in the “Asset Purchase Agreement.”
This protects both buyer and seller.