Thinking about transferring a business? Make sure you know what you’re getting into. This article covers 5 things you need to know before you transfer a business.
Whether you’re buying a business for the first time or you’re experienced with transferring companies, it’s important to know exactly what you’re getting into. When you transfer a business, there are many aspects of the sale you need to consider. The way you transfer a business will vary depending on your personal experience in business acquisition, as well as the type of business you’re buying or selling. One of the first things you should do is consult with your attorney. They’ll be able to let you know exactly how you can best transfer the business in question.
1. Is the whole business being purchased or just some assets?
Consider whether you are buying an entire business or if you are simply investing in some assets. It’s important that you and the seller both carefully discuss the specific portions of the business that are being sold so that you are both on the same page. For example, you may be purchasing an entire auto body shop, but you might just be investing in equipment. Make sure you know and understand what you’re getting when you make your purchase.
2. Are they any liabilities attached to the business that may come with the purchase?
In some cases, liabilities may be transferred along with the business you are buying. It’s important to know exactly what liabilities the current company has, such as debts or financial obligations. You and your attorney can discuss whether you will be required or obligated to accept these liabilities when the company is transferred.
3. What’s the full value of the business?
Do you know what the full value of the business is that you are buying? The total value of the company may play a role in both how the transfer is made, as well as in the final price. It’s important to have your purchase appraised to ensure you’re getting a price you are comfortable with.
4. Who are you buying from?
In some cases, you may purchase a business from someone you do not know and do not have a personal relationship with. In other cases, you may purchase a business from an employer, employee, or even a relative. Regardless of who you buy a business from, it’s important that you document the purchase and follow the correct legal process. Never partake in a verbal agreement. Have everything documented and written down.
5. Are you new to business?
If you’re new to business, the type of company you acquire and the way the transfer is processed may vary. It’s even more important that you talk with a lawyer if this is your first purchase. They’ll be able to guide you and help you understand what paperwork you need to file, as well as what steps you need to take in order to ensure the transfer goes smoothly.
When you’re ready to transfer a business, meet with your attorney first. Your lawyer understands the complex nature of business transfers and can carefully assess your personal situation to provide you with the best plan for moving forward. Call today to set up an appointment.