Most of us at one time or another has thought about owning a business. You may have been working for someone else and now wants the independence to do things your way and to reap the financial rewards of providing a good service or product.
Having identified a business for sale, there is much more to be done than just haggle over the price. In the long run, there are many things that may be more important than price. Consider the following:
- What are you buying? Assets or corporate stock?
- Are you buying the entire business or will there be others with whom to share decision-making and income or losses?
- How is the price to be paid? All at once or over time, and with or without third-party financing?
- Are any approvals or permits required from franchisors, landlords, or government agencies?
- Do equipment warranties or service agreements exist, and can they be transferred? What is the status of any inventory?
- Are you sure there are no unknown debts or liens that may affect your purchase?
- Have you reviewed the financial and corporate records of the business? Can you make the review before committing to the purchase?
- Does the person with whom you are dealing have full authority to act on behalf of the seller?
- Are there any broker’s or finder’s fees?
- Will the current employees stay in their positions as long as you would like?
- Will the sellers be willing to consult for a period of time and for a reasonable fee after the sale is complete? Are the sellers prohibited from competing with you after the sale?
- Do you have a written, enforceable agreement addressing these and other issues related to the purchase; and does it provide for remedies, including attorney’s fees, in the event of a breach of the agreement or a misrepresentation?
Purchasing an existing business can be exciting and rewarding. Make sure, however, that you ask all of the right questions, receive correct information, and evaluate the answers in light of relevant legal principles. If you need legal assistance in purchasing a business, please contact RRBMDK.