There are reasons a small business owner will want to buy or sell a business or a business division.

On the selling side, the founders may be retiring or relocating, or selling one line of business in order to focus on another, or they may be using a sale as a way to expand the business through the use of the buyer’s superior distribution or research resources.

On the buying side, a new owner may want to expand locations, add staff, add a product line, or expand geographically. Generally speaking, the goal for the buyer is to obtain additional resources or markets; the goal of the seller is to maximize the value of the sale.

In different circumstances, different transaction forms such as asset purchases or stock purchases, can help one or both parties achieve maximized goals, without being a “zero sum” game wherein one side’s gains are the other side’s losses.

Creating a “win-win” transaction requires cooperation of other side. The nature of negotiations (cordial/adversarial) can affect ability to discover and negotiate win- win values.

For many small business owners, a purchase or sale of business document can be the most complex legal document they have encountered. Even if a business is not the size of a Fortune 500 company, many of the basic business acquisition contract terms that large companies use are just as necessary for small businesses.

A few tips on how to have “win-win” business sales:

1. Be sure of the client’s objectives. Sometimes the individual circumstances of a client, or the individual circumstances of the party on the other side of the transaction, will affect how that person values a transaction. Knowing those objectives will permit the discovery of opportunities to maximize value for your client, possibly in the form of better price, or better payment terms, or other terms that the client values.

2. Use a term sheet. Rather than draft an entire contract, only to find out there is disagreement on significant issues, the parties should work with a term sheet that lets them determine whether they are in accord on the most crucial elements of the deal. The term sheet should be sufficiently detailed that the parties each understand what they are getting in the transaction. It is little service to a client to get the other side to agree to terms they don’t understand, and then pull out of the deal once the contract makes the terms clear.

3. Term sheets should be non-binding. The term sheet should be used to help the parties understand whether they have the economic basis for a deal, based on the information they have on hand when they first negotiate. The proper time to bind the parties is with a full contract that includes representations and warranties by each side, and which permits fuller investigation (due diligence) to ensure that the assumptions on which the term sheet was based are accurate.

The parties may want, however, to make some portions binding, such as provisions relating to confidentiality or an agreement not to solicit other offers during the pendency of the transaction.

4. Consider tax consequences. Oftentimes the economic value one side or the other expects to achieve will be lost once the tax impact of the transaction is calculated. Sometimes a deal that looks impossible to pull off will work economically once the tax impact is calculated. In all events, make sure that the tax impact is considered, either by the client, tax counsel, or the client’s financial adviser.

5. Use experienced attorneys. Sometimes a client will want to have a long-time attorney who has been important to the business, such as a regulatory attorney or a land-use counsel, do the legal work on a business purchase or sale. An attorney who generally practices in an area of law other than corporations or transactional law often will be unaware of the conventions of these types of transactions, or the underlying reasons behind such conventions. It is not unusual for an inexperienced counsel to “protect a client out of a deal” by insisting on terms that counsel for the other side considers to be inappropriate.

By contrast, two experienced counsel can often resolve contractual or factual issues quickly based on their familiarity with the issues involved.

6. Be sure of valuation issues. For either a buyer or a seller, the value of the business that is being sold may be established by a number of different methods, any one of which may be more or less fitting for the particular business in the transaction.

Technology companies may be short on hard assets, but valuable for a potential future cash flow. A company may have assets that are more valuable in the open market than the balance sheet indicates. In each case, the parties want to ensure that they are looking at the right method of valuing the business that is the subject of the transaction, so that buyers do not inadvertently overpay, and that sellers do not inadvertently undercharge.

7. Sellers need to be prepared to make detailed disclosures. The buyer’s due diligence process will entail the buyer becoming quickly knowledgeable about the nature and operation of the business being sold. The contract will usually require the seller to make significant factual disclosures to the buyer to permit the buyer to obtain such information.

8. If a franchise is involved, read the franchise agreement. If the small business in a transaction is a franchise, there may be consents or qualifications imposed by the franchisor, prior to the sale of the business to a new owner. There may be other significant limitations or confidentiality clauses that can affect how the negotiations are structured.

9. Watch for minority interests. Sometimes a business owner will permit another party, such as an employee or an investor, to become owner of a small number of shares in the business. Those shares can suddenly have veto power over a potential sale, turning the negotiation between seller and buyer into a three-corner negotiation between seller, buyer, and minority owner.