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Purchasing an Existing Business Lawyers
How Should I Decide whether to Purchase an Existing Business?
Many times it is easier and less of a financial burden for someone to buy into a preexisting business rather than attempting to start up their own. However, in doing so, a potential buyer should be aware of a few things when considering a business opportunity.
The most important thing is that a buyer should do her homework about the business. The buyer should understand every aspect of the business, including what the purpose of the business is, how it works, what is its current situation and where it is heading, and what are all the benefits and drawbacks of the business. This should involve an intimate knowledge of the business¿s finances, including financial records, cash flow statements, balance sheets, etc.
There are some other details that are essential to know about a business before making a definitive decision to buy it:
- Any potential of litigation the business (under the old owner) may face or is currently facing
- What patents, copyrights, or trademarks the company holds
- Whether the business is compatible with local zoning ordinances
- How the business protects any trade secrets it may hold
- If the commercial leases and major contracts can be transferred to the new owner
- The business license and the tax registration need to be transferable
- Who holds title to the company assets
- How consistent the company has been in paying taxes, and whether there are any pending tax liabilities
- Whether any employees or former employees have any pending claims against the company
- If the business is a franchise, what has to happen in order to get franchise approval
- If the business has committed any violations of environmental law
After Doing the Research, What Steps Should I Take when Purchasing the Business?
The first thing you will have to do is negotiate a price with the current owner for purchasing the business. You must also negotiate what assets of the business you will purchase as the new owner, which is usually done in an installment plan.
Should I Consult with an Attorney When Purchasing a Business?
Purchasing a business can be quite a complex process with many legal formalities and nuances. This is especially true after you and the current owner have outlined the terms of the sale, and now you need to draw up a written sales agreement. Your business attorney can help you write a proper and legally enforceable sales agreement and make sure your interests are represented in the agreement.
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