Buying, Selling & Closing a Small Business in California

Plain-English guidance for owners navigating main street deals, exits, and clean business closures.

Selling, buying, restructuring, or closing a business are some of the most important decisions you, as the owner, will ever make. It’s also when gaps in entity setup, contracts, and records tend to surface.

The deal documents, leases, contracts, and loose ends you handle now will follow you for years in your bank account, in your taxes, and sometimes in court.

Hey and Hey helps small and closely held California businesses, including many family-owned and equine-related businesses, navigate Main Street business purchases, sales, generational transfers, and orderly closures. We focus on plain-English explanations and practical, step-by-step guidance so owners understand their risk, protect their families, and get to the finish line without derailing the deal.

We typically work on asset and equity deals in the $1M to $25M range, and on proper wind-downs and dissolutions for LLCs and corporations that are no longer operating or that are being cleaned up after a sale.

If you’re considering a sale, purchase, partial transfer to family or key employees, or a structured closure, our goal is to make sure the documents match the deal you think you’re making.

When to Call a Lawyer in a Business Sale or Purchase

Most owners wait too long to bring in a lawyer, often after they’ve already signed a letter of intent or agreed to “standard” terms they don’t fully understand.

It’s usually wise to talk with counsel:

Before you sign a Letter of Intent (LOI) or term sheet.
The LOI is where price, payment terms, non-compete/non-solicit agreements, and key deal details are often finalized. Cleaning up a bad LOI later can be expensive.
Before you sign a broker’s form or “standard” purchase agreement.
Many forms are drafted to favor one side. You want to know where the landmines are before you commit.
If the deal involves a lease, key customer/vendor contracts, a franchisor, or significant permits.
Consent and assignment issues can make or break a sale. You need to know whose approval is required, what happens if you don’t get it, and how that affects your timeline or price.
When there is seller financing, an earn-out, or a long transition.
Payment over time, performance targets, and “sticking around for a year” need clear, enforceable terms and realistic protections. Security, default remedies, and the ability to take the business back (or other collateral) should be discussed up front.
If you’re buying from or selling to family or key employees.
Family deals and insider deals can be the most emotional and the least formal. Clear agreements help preserve relationships and keep expectations aligned among people who still have to sit around the same table later.
If you’re on the fence about selling, restructuring, or closing.
Sometimes the right move is to sell. Sometimes it’s a partial transfer to family or staff, a restructuring, or a structured wind-down and closure. Understanding what each option looks like legally can make the decision less overwhelming.
Review of formation documents, minutes, resolutions, and key filings

If you’re not sure whether your situation is “big enough” for legal help, we can start with a brief Legal Health Check and triage call, then decide together whether a Deal & Exit Strategy Session or a flat-fee project is the right next step.

Owners buying or selling a small, closely held business (often up to the low millions in value)
Family-owned businesses planning a partial sale, generational transfer, or full exit
Buyers taking over an existing business, including asset purchases and equity purchases
Owners who have decided to wind down and close their business the right way
Equine and non-equine businesses that need both business and practical industry insight
Owner-operated and family-run companies with roughly low-six-figure to low-eight-figure revenue
Businesses with 0–50 employees or regular contractors and no in-house legal department

Common Examples

Professional and personal-service businesses
Trades and local service companies
Small manufacturing or distribution businesses
Online or hybrid brick-and-mortar/online businesses
Barns, training operations, and equine facilities considering a sale, purchase, restructuring, or closure

If your business is in the equine industry, we draw on both our Business & Transactions work and our Equine Law experience to address horse-specific issues around risk, contracts, and property.

①

Early Strategy & Deal Framing

We start by understanding:

Who is buying and who is selling (individuals, LLCs, corporations, family members, key employees)
What’s being transferred (assets, stock/membership interests, or both)
Rough size of the deal and how the payment will work
Existing entities, contracts, and any obvious red flags
Whether there are family or generational-transfer dynamics to consider

We talk you through an asset sale and an equity/stock sale, explain them in simple terms, and work with your CPA so the contracts and tax treatment align with your overall financial and estate-planning goals.

②

Letter of Intent (LOI) or Term Sheet

If you don’t already have an LOI, we can draft one. If you do, we can review and advise on:

Purchase price and adjustments
Payment terms and timing (including earn-outs and seller financing)
What’s included/excluded (inventory, equipment, IP, customer lists, accounts receivable)
Non-competition / non-solicitation provisions (to the extent enforceable under California law)
Confidentiality
Roles for family members or key employees post-closing
Key contingencies and timelines

The goal is a clear, balanced roadmap that both sides can live with and that sets up a smoother long-form agreement.

③

Due Diligence

During due diligence, we help you focus on what buyers, lenders, and regulators actually care about. We help you:

Identify and prioritize the documents to review
Explain key contract terms with customers, vendors, landlords, and lenders
Spot issues with permits, licenses, or regulatory requirements
Review entity records (minutes, resolutions, operating agreement/bylaws)
Look at how employees and independent contractors are handled, and where needed, coordinate with specialized employment counsel

We also coordinate with your CPA on tax returns, financials, and transaction structure. For sellers, we may recommend targeted cleanup work before or during the sale so your entity and contracts are “due diligence ready,” which can increase value and reduce friction. If that’s needed, we may point you to our Business Formation & Entity Cleanup or Governance Reset services.

④

Drafting and Negotiating the Purchase Agreement

We draft or negotiate the main transaction documents, typically including:

Asset Purchase Agreement or Stock/Membership Interest Purchase Agreement
Schedules of included/excluded assets and assumed liabilities
Disclosure schedules
Escrow terms, if any
Earn-out or seller-financing provisions, where applicable

We explain each major clause in normal language so you know what you’re agreeing to, not just what the paper says. We pay particular attention to representations, warranties, and indemnification provisions, which often drive how much risk you’re actually taking on after closing.

⑤

Ancillary Documents & Closing

Depending on the deal, you may also need:

Bill of Sale and Assignment of Contracts
Lease assignment or new lease
Promissory note and security agreement if there is seller financing
Non-competition / non-solicitation agreements (to the extent enforceable under California law)
Employment/independent contractor agreements for key people
Transition services or consulting agreements
Member/shareholder consents and resolutions authorizing the transaction

We help organize a clean closing checklist so you know what needs to be signed, delivered, and filed, and when, so that closing is more of a checklist event than a fire drill.

⑥

Post-Closing and Transition

After closing, we can help with:

Entity and governance changes (new owners, officers, managers)
Updates to contracts and forms under the new ownership
Next steps toward dissolving an old entity that’s no longer needed
Basic corporate housekeeping to keep the new structure in good shape
For family-owned businesses, clarifying ongoing roles and expectations for family members who stay involved vs. those who exit

Common issues buyers face:

Choosing between an asset purchase and a stock/ownership-interest purchase
Making sure the entity, contracts, and records match what’s been represented
Handling leases, key contracts, and permits that need to be assigned or renewed
Clarifying what happens with employees and independent contractors (at a high level, coordinating with employment counsel as needed)
Ensuring the purchase agreement matches your understanding of what’s included, what’s excluded, and who is responsible for what after closing

Typical scope of buyer’s counsel (for Main Street deals):

Strategy discussion before or around the letter of intent (LOI)
Review and comments on the LOI
Drafting or reviewing the asset or equity purchase agreement
Coordinating with your CPA on structure and tax considerations
Reviewing key contracts, leases, and basic records as part of due diligence
Drafting or reviewing closing documents and key amendments
Coordinating post-closing steps, such as entity cleanup or dissolution of the seller’s entity, if you are on that side later

Common Issues for Sellers

Getting the business “presentable” before buyers begin due diligence
Clarifying which assets, contracts, and obligations are included in the sale
Managing earn-outs, seller financing, or non-competition / non-solicitation terms
Protecting against future claims through representations, warranties, and indemnities
Coordinating with family members and other owners so the deal has proper authority and support
Ensuring governance and ownership records are accurate and complete

Typical Scope of Seller’s Counsel

Reviewing or shaping the LOI and overall deal structure
Drafting or revising the purchase agreement and related documents
Coordinating with your CPA on tax treatment and payout structure
Handling consents and assignments (landlords, key contracts, lenders, franchisors)
Explaining post-closing obligations and risk exposure
Advising on whether and when to dissolve or repurpose the selling entity

Not Sure Whether to Sell, Restructure, or Close?

Sometimes the decision isn’t “sell vs. keep,” but “what’s the least painful next step?” For some owners, that may be a sale. For others, it may be a partial transfer to family or key employees, a restructuring or consolidation of entities, or a structured wind-down and closure.

We help you understand what each option looks like legally, how it affects your risk, cash flow, and relationships, so you can make a decision that fits your goals, finances, and family.

We help California owners evaluate whether it makes more sense to:

Pursue a sale (full or partial, including to family members or key employees)
Restructure or consolidate entities
Transfer assets to a new entity or owner and then dissolve the old one
Properly wind down and dissolve LLCs and corporations that will no longer operate

We aim to avoid future surprises such as:

Ongoing Franchise Tax Board minimum taxes and penalties for “empty” entities
Lingering vendor accounts or unknown small claims
Confusion about ownership of assets or intellectual property
Disputes among family members or former partners over what was supposed to happen

Typical “Winding Up” Steps

Reviewing leases, loans, and contracts to understand exit obligations
Notifying customers, vendors, and other key counterparties
Handling employees and contractors at a high level, coordinating with employment counsel as needed
Collecting receivables and addressing remaining payables and creditors
Handling remaining inventory or equipment
Distributing remaining assets among owners in a documented manner

Dissolving LLCs and Corporations Often Involves

Confirming requirements in operating agreements, bylaws, or related documents
Obtaining proper owner approvals for dissolution
Filing dissolution or cancellation documents with the California Secretary of State and other agencies
Coordinating with your CPA on final tax filings and elections

Special Considerations for Family-Owned Businesses

When family is involved, a sale, transfer, or closure is rarely just about the numbers. It may also be about fairness between siblings, honoring prior promises, or planning for the next generation.

Issues we help family-owned businesses think through:

Whether to sell to family members, key employees, or an outside buyer
How to handle owners who are active in the business versus those who are not
Balancing sale proceeds and ongoing involvement for different family members
How to document expectations so that “handshake” understandings don’t turn into disputes later
Aligning the business transition with your estate and succession planning, in coordination with your estate planning attorney and other advisors

Clear documentation can reduce conflict, protect relationships, and make it easier for the next generation to succeed.

Unclear Liabilities

Who’s responsible for old debts, customer refunds, and warranty claims? Ambiguity here can lead to expensive surprises.

Leases and Landlord Approvals

Many commercial leases require landlord consent for assignment or a change of control. That consent is not automatic and may be leveraged to change terms.

Customer and Vendor Contracts That Can’t Be Assigned

Some contracts prohibit assignment or require written consent. Losing a key customer or vendor contract can materially change deal value.

Employee and Contractor Issues

Misclassification, unpaid overtime, undocumented arrangements, and unclear ownership of work product are common risk areas. We help identify these issues and coordinate with employment counsel when needed.

Non-Compete Expectations That Don’t Fit California Law

California severely limits non-competes. We focus on realistic protections like confidentiality, trade secrets, and carefully framed non-solicitation clauses.

Sloppy or Incomplete Entity Records

Missing minutes, unsigned operating agreements, inconsistent ownership records, and informal family arrangements can derail deals. Sometimes a Governance Reset or Entity Cleanup is the right first step.

Seller Financing Without Adequate Security

When payment is spread over time, we evaluate collateral, default remedies, personal guarantees where appropriate, and realistic recovery options if payments stop.

How We Work on Deals and Closures

When you’re buying a business, selling one, or planning a wind-down, we use the same three-step process so you always know where you are and what comes next. We focus on main street business deals and related entity work, not large M&A transactions or litigation-heavy disputes.

Legal Health Check & Triage Call

We start with a short online Legal Health Checkup. For deals and closures, this focuses on where you are in the process (considering options, LOI stage, contract in draft, or already partway through a wind-down), who is involved, and what you’re hoping to accomplish.

Once you submit your answers, you’ll be able to schedule a 20-minute triage call.

On that call, we:

Confirm that your deal or closure matter is within our scope and size range.
Clarify your goals, timeline, and whether you’re buying, selling, restructuring, or closing, and
Recommend whether a Deal & Exit Strategy Session (focused on your deal/exit) or a specific flat-fee project is the right next step.

We do not review documents or give legal advice on this call. It’s focused on fit, expectations, and next steps. For matters that are primarily employment disputes, tax controversy, IP, franchise, real estate–only, or litigation-heavy, we may refer you to other firms that have served our clients well.

Fee: Your initial investment for this triage call is $150. If we decide to work together on the next step, we will credit this amount toward your Strategy Session or a flat-fee project.

Schedule & Pay for a Business Legal Triage Call

Deal & Exit Strategy Session

For buyers, sellers, or owners considering closure or restructuring, the next step is typically a Deal & Exit Strategy Session focused on your deal or exit plan.

This is a focused working meeting—not a generic free consult—where we:

Walk through your Legal Health Checkup in more detail and clarify the structure you’re considering
Review up to three key documents (for example, an LOI or term sheet, a draft or existing purchase agreement, key leases, or ownership/interest documents)
Explain your options and risk areas in plain English, with a clear, prioritized action plan for how to move forward.
You leave with a practical roadmap for whether to pursue a sale, restructure, transfer interests to family or key employees, or plan an orderly wind-down and dissolution. Where appropriate, we’ll also outline flat-fee or phased options, so you know the likely scope and cost up front.

Fee: The Business Legal Strategy Session is billed as a flat fee. Most sessions fall within the $1,500–$2,500 range, depending on the scope of the issues and preparation involved.

Flat-Fee Projects & Ongoing Support

Once you’re comfortable with the plan, we move into implementation on a flat-fee basis wherever possible. For deals and closures, that work is often structured in phases, such as:

Deal Strategy & LOI Phase – Reviewing or drafting your LOI/term sheet, talking through structure and key terms, and outlining the path forward.
Diligence & Purchase Agreement Phase – Assisting with legal due diligence, drafting or negotiating the main purchase agreement, and advising on key risk areas.
Closing Documents & Transition Phase – Finalizing ancillary documents, coordinating signatures and closing logistics, and advising on immediate post-closing steps.
Closure & Dissolution Packages – For businesses that will be wound down instead of sold, or for “empty” entities after a sale, we can scope a separate flat-fee package for wind-down and dissolution steps.

Each project or phase is scoped in writing and approved by you before we begin, so you know what’s included and what it will cost. For more complex, unusual, or larger deals, we may recommend a hybrid flat-fee/limited hourly model; in all cases, the fee structure and expected scope are clear before you decide whether to move forward.

If you’re already mid-stream LOI signed, draft contract in hand, a closure you’ve started yourself, or questions about an “empty” entity, we can usually step in, review where things stand, and help you decide the smartest next step.

Buying, Selling & Closing FAQs

Do you represent both buyers and sellers? Can you act for both sides in the same deal?

We represent both buyers and sellers, but never both in the same transaction. In any given deal, we represent either the buyer or the seller, keeping your interests front and center. In some limited situations, we can act in a very narrow, document-preparation role, where we do not advise either side on negotiations, but we will be clear about conflicts and what we can and cannot do.

Do you handle very small deals, or only larger transactions?

We regularly work on true “Main Street” deals, including smaller transactions and sales between individuals, families, or a single buyer and seller. If your business is meaningful to you and involves real risk, it is big enough to deserve careful legal attention.

What size deals do you handle?

We usually work on Main Street and lower-middle-market deals, often valued up to $25 million ($1M to $25M). If your transaction is significantly larger or involves complex financing or securities issues, we may refer you to another firm or bring in additional counsel better suited to that scale.

Can you help if I already have a broker or M&A advisor involved?

Yes. We regularly coordinate with business brokers and M&A advisors, handling the legal side, entity readiness, contracts, risk allocation, and the purchase agreements while they focus on valuation and finding the right buyer or seller.

I already signed a Letter of Intent. Is it too late to involve a lawyer?

It’s not too late, but your options may be more limited. We can review the LOI, explain what’s effectively locked in, and help you negotiate the purchase agreement and disclosure schedules with a clear understanding of your risks and leverage.

Do you handle disputes or litigation that arise out of a deal?

We focus on transactional work: structuring and documenting deals, restructurings, and closures to reduce the chance of disputes. If a matter becomes litigation-heavy, we can discuss whether it makes sense for a separate litigation firm to be involved or take over, and we can coordinate with that team as needed.

If I sell the assets of my business, do I still need to dissolve my LLC or corporation?

Often, yes. After an asset sale, the entity may still exist and continue to incur annual California obligations until it is properly dissolved or repurposed. We can advise you on whether dissolution, repurposing, or a restructuring makes sense in your specific situation and handle the dissolution process if appropriate.

Can you help close a business that has debt or unpaid taxes?

We can help plan and document an orderly wind-down and coordinate with your CPA regarding tax filings. If there are significant insolvency issues, unpaid taxes, or potential bankruptcy, we may recommend engaging or referring specialized counsel while we continue to handle corporate and transactional matters.

Do you coordinate with my CPA and other advisors?

Yes. Deals, restructurings, and closures are rarely just legal questions. We work closely with your CPA and, where appropriate, your financial and estate planning advisors so that the legal documents support your broader plan.

Get in touch