There are plenty of reasons to buy an existing business rather than pursue a startup venture (although Lovelace Law can help you with both):

  • Established businesses are easier to finance because lenders are able to accurately assess the risks involved in the loan.
  • The brand is already established, so that’s one less thing you have to do.
  • There are existing customers and contacts who can help you identify the target audience specifically.
  • Income happens sooner because of the reasons listed above.
  • Employees have been trained by the seller and already have a general understanding of their roles and responsibilities.
What’s being sold?

Once you have decided which business you would like to purchase, the next step you should take is to ask the seller exactly what is being sold. There are multiple pieces of a business, and not all business owners sell the same things. It’s important to know exactly what you’re getting before you sign on the dotted line. They might only be selling assets, or they could be selling the entire entity. Are they selling shares or ownership interest? These distinctions impact the purchasing contract.

Assets
Purchasing business assets includes specific goods like office furniture, the company website, and computers. They’re the tangible pieces of property that can pass from one hand to another. If the company owns the building where they office, that’s included. If the building space is leased, that’s a separate discussion. (Note: It’s worth asking if you can assume the seller’s lease.)

Entire Entity
When you purchase an entire business entity, all the assets and all the liabilities (read: debts, bills, losses, etc.) become yours.

Corporate Shares
Corporate shares only apply if you’re buying a business that was initially set up as a corporation. It’s the business set-up that determines whether you can purchase shares or interest in an existing company.

Ownership Interest
Non-stock interest in a company can be sold by businesses that were initially structured as LLCs or partnerships.

What role does a Burleson business attorney play in the purchase of a business?

In addition to an accountant to look over the financials of the business you want to purchase, you need a business lawyer to be part of the process. An attorney helps in a variety of ways.

An attorney will serve as a consultant by reviewing the purchase contract and the assets that need to transfer to complete your purchase. Some buyers opt to pick and choose the contracts and liabilities they want to include in the purchase. An attorney helps you determine the best options for the transaction:

  • Which assets would be best suited for you moving forward?
  • Which liabilities would be least restrictive?
  • Will the seller guarantee the liabilities?

A lawyer also provides a full view of which type of transaction would be most beneficial given your specific circumstances and goals.

In short, you need a business lawyer to review the contract, discuss the risks, and negotiate for you should the need arise. Lovelace Law business lawyers are standing by to guide you through the business purchasing process. Call now to schedule your free consultation.