You may be reaching a point in your life when it’s time to buy or sell a business.
Regardless of whether you’ve been in business for years and it’s just the right time in your life to sell or you feel like you can do more with your life than hanging out in the corporate world, there are some things you should know before you buy or sell a business.
Two Forms of Purchasing and Selling a Business
To start, there are two forms of purchasing and selling a business:
- Asset Purchase – This is typically the most sought after approach because a buyer can purchase the seller’s assets without incurring any of the seller’s debts or liabilities.
- Stock Purchase – When a buyer purchases some or all the seller’s stock. This is the most ideal situation for the seller because the buyer will typically incur the seller’s debts and liabilities in addition to assets.
Of course, there are liability concerns in any business deal. Once you have determined which form of purchase or sale you are after, the next step should always be negotiations and discussions, which you should always do with a business attorney present.
Don’t forget to check out this site here to read more about starting a business in Florida.
What Should You Bring to the Discussion Table?
Most business deals involve some type of negotiation—and the same is true for purchasing and selling a business. A business is often “appraised”, similar to appraising a home before the owner’s loan is refinanced or the property goes up for sale, to determine the overall value and worth of the business. Assets are also included in determining the overall worth of the business.
Before you enter into a discussion or negotiation session with a buyer or seller, be sure to address the following:
- Do you need shareholder or board of directors’ approval before completing the transaction?
- What documents are required?
- Which contracts require approval? (This could include leases, loan agreements or a Letter of Intent.)
- Will employees be retained by the buyer?
These are just a few examples of some things to consider before negotiating or joining a discussion about the purchase and sale of a business.
Be sure to also discuss these things with your business attorney beforehand. Your attorney should also know which documents are necessary to complete the transaction.
Another major area to consider when purchasing or selling a business is capital gains taxes or any other tax implications that could be associated with the transaction. Learn more about taxes in the purchase or sale of a business.
It’s Closing Time…
Once you’ve reached an agreement with a buyer or seller or you have reviewed the Letter of Intent with your business attorney, now it’s time to begin the closing process.
Again, if you have ever bought a piece of property or a home, then you are likely already familiar with the closing process—but with different collateral and documents, of course.
In order to prepare for your closing, work with your business attorney to make sure the following items are complete and ready to go:
- All documents are properly signed, dated, and notarized (if necessary)
- All necessary documents—such as deeds, titles, certificates, etc.—are all present
- All sales proceeds are included according to the agreement
The time it can take for everything to be processed and for the complete sale to go through will depend on the business itself as well as the items outlined in the agreement.
Visit here to learn more about business contracts and agreements with a business attorney.
Don’t Buy or Sell a Business without a Business Attorney
If you are considering purchasing or selling a business, first discuss this with a business attorney.
A business attorney will work with you to organize the transaction and even give you legal advice on which assets, stocks, liabilities, and so on should or shouldn’t be included in a business agreement.
Visit here to learn more about working with a business attorney in West Palm Beach.