Business Purchase and Sale Lawyers in San Diego, CA
Purchasing a Business in Southern California
Hundreds of thousands of businesses change hands during a year in the US. Some are tiny, some are very large. The purchased businesses vary from a local neighborhood grocery store to software development firms to construction companies. What they all have in common is the potential to surprise the buyers in ways that could empty their bank accounts quickly. The less experience you have, and the less your lawyer has, the more likely the surprise.
Do You Want the Business, or Just the Assets?
One major consideration is whether you want to buy, the entire company or just the company’s assets. In a purchase of the company, the buyer essentially replaces the business’s current owners, taking over the debts, liabilities, and legal entity. In an asset purchase, the buyer obtains only the MB6-869 assets of the company, including goodwill, leaving the sellers in possession of the entity or “shell.”
The decision has both tax and valuation consequences. Buyers often prefer an asset purchase, which allows for immediate depreciation of the assets and takes the business torts debts and liabilities out of the equation, making it easier to value the business. Sellers, on the other hand, often prefer that the entire business entity be purchased, which gives them the benefit of more favorable capital gains tax rates and wipes out all existing debts and liabilities.
Contingencies are Crucial
The time when you first decide to buy the business can be a dangerous time. Too many buyers, especially first time business buyers, imagine only how good it’s going to be to run their own business, control their own lives, be hugely successful and perhaps buy more businesses!
All good thoughts, but you can’t let the imaginary blind you to the very real need to be thorough. And that’s where the aid of an attorney who has been through many purchases is crucial. The attorney knows what “little problems” are possible and how big the problems they can cause may turn out to be.
Any business purchase agreement needs to be written to protect the buyer—and the buyer’s deposit–from such things as:
- Delays in obtaining financing
- Delays in obtaining permits, licenses and approvals required for the business to be put to its intended purpose
- Delays in obtaining a suitable new lease for the premises
And these are just the common delays that may affect any purchase. There are countless others that may pop up depending on the kind of business being purchased, its location, its ownership form, and a host of other variables. A lawyer who has been through the business purchase
1Z0-144 process many times is an invaluable asset.
Understand the Business: the Importance of Due Diligence
The number one priority for any purchaser of a business is to fully understand everything possible about it. The process of obtaining that knowledge is called doing due diligence. The information you find out during this process can dissuade you from buying the business at all, and certainly will factor into the amount you’re willing to pay for it.
Since most of the relevant information is in the seller’s hands, it’s crucial that you have the assistance of professionals who understand the type of business involved, and are intimately familiar with the kinds of records and financial documents that these businesses use. Account books, inventory records, leases, and any other document that bears on the business’s profitability (now and in the future) should be examined by professionals.
Experienced San Diego business purchase lawyers will also obtain:
- The seller’s guaranty of the accuracy of the internal documents provided
- A clause in the purchase agreement holding a portion of the purchase price back for a reasonable period of time after the business is transferred
Get Experienced Legal Help
Buying or selling a business is a tricky endeavor, even for experienced business people. If you’re not experienced, it’s truly a hazardous job. At Boyd Law in San Diego, we know very well where the traps and pitfalls are, and we know how to guard against them in the terms of the contract for sale. Contact us for a free consultation and start putting the worries where they belong: in the hands of your experienced legal team.