To prevent conflict, it is important to address any legal concerns when buying or selling a business. If you are purchasing a business, do you want to buy the companyās stocks or assets? Suppose you choose to purchase the companyās stocks. Then, an expert business attorney can perform background research and develop an overview of the company. If you do not hire an attorney, however, you can run into some issues, like accountability for civil liabilities, debts, or taxes.
If you are selling a business, you want to ensure that you are receiving the funds that you are entitled to. You have two options to sell a business owned by a company:
- Through a stock purchase.
- The buyer will purchase the outstanding shares of the companyās stocks, including the assets and liabilities from the seller.
- Through an asset only purchase.
- The buyer will purchase the assets alone, excluding the liabilities.
Is a Buy-Sell Agreement Required?
If a company has multiple owners and shareholders, a buy-sell agreement should be drafted in case a shareholder/owner passes away, becomes incapable, is removed from the position, etc. The business should be prepared for such a situation and have a back-up plan.
With that being said, a buy-sell agreement can provide a strategy and mitigate any issues should this situation arise. It can also stipulate certain conditions that can regulate who the business owner can be.
How to Prepare for a Business Sale
- Consult with a lawyer.
- An expert business attorney can be of great use with the sales and the contracts.
- Update your financial records.
- Gather, prepare, and update all the companyās financial documents.
- Valuate the company.
- Determine your companyās value based on its revenue, financial standing, reputation, and so on.
- Employ an agent.
- An agent can aid in getting a sale, providing insights, and assisting with the decision-making.
What Are the Inclusions in a Sales Agreement?
A sales agreement, including the sale contract, should summarize and provide full detail of the sale of a company.
When drafting a sales agreement, the following should be included:
- Warranties owned by the seller.
- Detailed outline of products/services offered by company.
- Company minutes that provide authorization for the sale.
- Overall payment due, including the schedule and method of payment.
- Duration of the buyerās building inspection where the company is located.
- State wherein the agreement will fall under their laws.
- Terms establishing the mutual agreement between both parties regarding alterations made to the agreement in writing.
- Property description, including the personal property that will be transferred.
- Financial agreement that declares how the buyer will pay for the company.
What Happens to an Existing Debt?
If you are selling a business, the debt is not connected to the sale, and it will carry on. Since the debt will not be passed on to the buyer, the buyer should inform the creditors of the seller with a notice prior to taking over the business.
The notice should include the purchase price, the names and addresses of the buyer and seller, the new location of the seller, and so on. For the specific prerequisites, you should check the local regulations for buying and selling businesses.
Do You Plan on Buying or Selling a Business? We Can Help You
If you are interested in buying or selling a business, you need the guidance and assistance of qualified and experienced business attorneys.
At Jurado & Associates, P.A., we can guide you through the settlement procedure and assist you with negotiations, drafting contracts, setting up the sales processes in real estate, and assessing the financial statements. We have the knowledge and expertise to help you make the best decisions for your business. Contact us today by phone at (305) 921-0976, by email at [email protected], or WhatsApp atĀ +1 (305) 921-0976 .
