» Sale or Purchase of a Business

Sale or Purchase of a Business

Buying or selling a business is a complex transaction requiring the buyer/seller to have solid knowledge of the law of business associations, or to have a good business attorney. Hundreds of decisions must be made, including how to structure the transaction, as this will have an impact on taxation, what documents are required and how the business is operated. For instance, if the business is a partnership or sole proprietorship, the transaction is automatically structured as an asset purchase.

If the company is structured as a limited liability company or as a corporation, the transaction may be a merger, consolidation, asset or stock purchase. More often than not, most sales and purchases of small businesses are structured as asset acquisitions or stock purchases.

In the case of an asset acquisition/purchase, the buyer is typically purchasing all of the assets or just some specific assets. A buyer is then free to choose which liabilities and assets they want; a move that will reduce their exposure to unknown liabilities. If trademark issues, leases or contracts and business licenses are involved, this is a more difficult situation, requiring legal assistance.