The sale of a business is often handled by real estate brokers and agents. Many of the agreements are prepared on standard DRE (Dept. of Real Estate) forms. Even where the sale is handled through an escrow, the broker/agent needs to be extra careful.
Unlike some, or most land deals, the sale of a going concern is just that, a going concern. There are a number of issues that need to be addressed. I'll deal with many of these in future posts, but one is the disclosure of financial information. If the broker/agent acts in any regard in transferring the information from the seller to the buyer, that broker/agent may be considered to have represented that the financial information is valid and true. What happens when the buyer finds out otherwise, or believes otherwise, after paying lots of money for the business? The buyer goes after the seller, and the broker/agent. The broker/agent needs to make it crystal clear that it is not verifying any of the information. Better yet, the broker/agent should have no part in the physical transfer of this information.
More thoughts on broker/agent liability in business sales coming up.
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