The purchase or sale of a business is a major legal event irrespective of the sales or purchase price.
The prospective purchaser must do due diligence to determine the historic financial performance of the target business and it's current financial health. There may also be labor and employee benefit issues. The target's compliance with local, state and federal laws and regulations must be investigated.
If the seller is going to take back a note for some or all of the sales price, the seller must do due diligence to determine the financial status of the purchaser. Securing the note with the business interest sold to a financially-unreliable buyer spells disaster. The buyer may run the business in the ground so that there is no value to take back when the purchaser defaults on the note.
A seller should take great care to provide a legitimate prospective buyer with all information pertaining to the business from which the prospect can make an informed decision as to whether or not to follow through with the acquisition. The seller providing buyer with exagerated financial and other information may lead to an expensive lawsuit and allegations of fraud.
One mistake that parties to a sale and acquisition often make is to rely on one attorney to draw the documents and thus effectively represent both parties. The usual reason is a concern about the legal expenses. A party who chooses not to be represented by independent counsel may discover later the horrendous costs of litigation. Representation during the acquisition or sale will not guarantee the avoidance of litigation. But it may avoid it or at least improve the chances for a favorable settlement.