You’ve decided to buy an existing small business.\u00a0 Let’s say the owner has decided to retire and you see this as a great opportunity to\u00a0 take over a profitable enterprise. You’ve negotiated the purchase price with the help of your accountant and now it’s time to enter into the sales agreement.\u00a0 How should you\u00a0 proceed?<\/p>\n
As a first step, the seller will have their attorney prepare the sales agreement. Now is the time, if you haven’t already done so, to retain an attorney familiar with buying and selling small businesses.<\/p>\n
When I represent buyers, my first concern is that the transaction is structured as an “Asset Purchase” rather than a “Stock Purchase.”\u00a0 If the business is owned by a corporation, the seller may seek to sell you the stock of the corporation.\u00a0 As a purchaser, this is risky.\u00a0 If you purchase the stock of a corporation, in addition to acquiring the business assets, you will also be assuming all of its liabilities, such as unpaid taxes and lawsuits.\u00a0 Not assuming these potential liabilities is a major advantage of an asset purchase.<\/p>\n
If the seller agrees to an asset sale, what provisions should a Purchaser ask to be included in an Asset Purchase Agreement?\u00a0 Stay tuned for my next post…<\/p>\n","protected":false},"excerpt":{"rendered":"
You’ve decided to buy an existing small business.\u00a0 Let’s say the owner has decided to retire and you see this as a great opportunity to\u00a0 take over a profitable enterprise. You’ve negotiated the purchase price with the help of your … Continue reading