levy and parthners

BUYING & SELLING BUSINESSES

Making the decision to buy or sell a business requires a thorough review to ensure that your legal interests are protected. At Levy & Partners, our attorneys are experienced in all aspects of the purchase and sale of a business including business partnership purchases, partnership dissolution, asset division, and corporate mergers.
Are considering selling or buying a business?

Allow an experienced business attorney from Levy & Partners to assist you with matters such as the following:

  • Review, draft, or modify a purchase agreement to ensure that it is properly drafted and contains a non-compete clause that will protect your interests
  • Ensure that the purchase agreement protects your business and that any promissory note or security agreement is drafted correctly
  • Advise you as to all of the lease rights and restrictions for the business location
  • Determine whether the business you are buying has complied with all local, county and state laws
  • Ensure the location is zoned properly for the business you are buying

If you are buying a business: The main question is whether you will be purchasing the stock of the company or the company assets. If you are buying a the stock or membership interests of the existing company, a business lawyer can research and inform you of the entire corporate history. You may be inheriting certain risks such as responsibility for back taxes, debts, or civil liabilities.

If you are selling a business: How are you going to get paid? Should you finance the sale for the buyer over a period of years? How are you going to get all of the money you are entitled to? Our lawyers can provide you with the resources and advocacy you need to protect your rights.

There are two ways to sell a business owned by a corporation. You can sell the business through a stock purchase or through an “assets only” purchase.

+ Stock Purchase: You are selling all of the outstanding shares of stock to the buyer. The buyer is buying the business and all of its assets and liabilities.

+ Asset Only Purchase: The buyer is only purchasing the assets of the business. The buyer is not buying the liabilities. In an “asset only” sale, the selling corporation’s shareholders must approve the sale. In an “asset only” purchase, it is important to determine whether the corporation selling the assets is a party to any contracts limiting the ability of the corporation to sell its assets. For example, many equipment leases prohibit the sale or transfer of the equipment to a new owner. Most commercial leases will not allow the purchaser to simply take over the commercial leased space where the selling corporation is located.

Contact Levy & Partners today for a consultation with an experienced business law and transactions attorney if you are considering selling or buying a business.

FREQUENTLY ASKED QUESTIONS

Do I need a buy-sell agreement?

Any business with more than one shareholder or owner should consider a buy-sell agreement. If a shareholder or owner dies, divorces, becomes disabled, or is removed from employment, the business needs to be adequately prepared on what to do. A buy-sell agreement will provide a plan of action and minimize any problems that may pop up. Additionally, a buy-sell agreement can contain provisions to help limit who may become an owner of the business.

What Should I Do When Preparing to Sell My Business?

  • Update financial records: Update and organize the financial records of the company.
  • Hire an agent: An agent can help you advertise the fact that your company is for sale and get offers for your business. This individual will also be able to advise you of whether certain offers that come in are worth consideration.
  • Value the business: The value of your company can be determined from the financial status (profits, etc.) of your company and the reputation.
  • Speak with a lawyer: An attorney can ensure everything is in order for the sale. The attorney will also help you with any sales contracts.

What Happens to Debt When Selling a Business?

Unfortunately when selling a company, debt will still remain and creditors can still come after you for the corporation’s debt. The buyer should get a list of all the creditors of the seller and notify them before they take over the company. The notice should include such items as the purchase price, the names and addresses of the buyer and seller, and the new address where the seller may be reached, among other things. Check with your local laws for the exact requirements. Here are some options when dealing with business debt when selling a company:

  • Consolidate the debt with low interest loans
  • Bankruptcy
  • Sell assets to pay down the debt
  • Contact creditors early and figure out a solution
  • Cut other costs and use that money to pay down the debt

What Should Be Included in the Sales Agreement?

Sales agreements and sales contracts for a sale of a company need to be full of details and describe the sale of the company. When you draft a sales agreement, these legal terms should be included:

  • A detailed description of the goods and services you are selling with your corporation;
  • The total payment due along with the time and manner of payment;
  • A clause stating that both parties must agree and approve for any changes to the agreement in writing;
  • How long the buyer has to inspect the building the company resides in;
  • The state whose laws will govern the agreement;
  • Financial arrangements, such as how the buyer intends to pay for the company;
  • Description of the real property (real estate, buildings, etc.), if any, and the personal property (machines, furniture, etc.) to be transferred;
  • The minutes of the corporation organization authorizing the sale, if the business keeps minutes; and
  • All warranties of the seller.

Drafting business agreements can be complex and tricky. Hiring an experienced contracts lawyer is important to make sure all the necessary terms of the contract are included in the sales agreement.

Should I Consult an Attorney When Buying or Selling a Business?

Business acquisition and selling a company involves many negotiations and contracts. A business attorney can assist you in the negotiation process to help you get what you want for your future business. An attorney can also help you sift through financial documents to determine what is relevant to the sales transaction. A lawyer can also arrange the real estate sales process, should you ultimately wish to buy or sell the business property.

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