Selling your business is a complex process that involves many considerations. An experienced business lawyer can help you navigate the process and protect your interests throughout the transaction. Failing to get the legal advice and support that you need could result in errors that cost you time and money.
Ways to Sell Your Business
Selling your business can involve two very different procedures: selling your business as a legal entity and selling the assets that your business owns, but not the legal entity itself.
Selling Your Business as a Legal Entity
If you sell your business as a legal entity, you are selling stock in your corporation, or your membership in an LLC to the buyer. This arrangement tends to be less common, as it requires the buyer to, in essence, step in the shoes of the seller, and assume the liabilities of the business, which can be risky.
However, the sale of a business as a legal entity also can be advantageous if a buyer wants to purchase a business with strong name recognition and a good reputation in a community. This is not a good reason to buy stock, as buyer can buy the business name, intellectual property, and goodwill of the business, and still achieve same goal. There may be tax advantages, if the seller is a C Corporation, in the avoidance of double taxation.
Selling Your Business Assets
The more common type of business sale is the sale of business assets, such as real estate, equipment, furniture, etc. The business entity may dissolve in this situation, thus allowing the buyer of the assets forms his or her own business entity to operate a new business using the purchased assets. In other cases, the business entity may continue, perhaps allowing the seller to pursue a different type of business endeavor.
Issues that May Arise During the Sale of a Business
First, as the seller of the business, you will want to ensure that you are paid on time. One way to avoid this problem is to not personally finance the transaction. However, if you cannot avoid financing the sale, you should be sure to have your business attorney draft the legal documents necessary to protect yourself in the event of a default by the purchaser, including a promissory note, personal guarantees, security agreement, and more.
Next, you should avoid making any misrepresentations or improper warranties about any aspect of the business or its assets prior to the sale. Doing so can open you up to litigation in the future, which is something you want to avoid.
If your business is currently involved in any type of litigation, from employee disputes to tax issues, you definitely should try to resolve those disputes before you attempt to sell your business. Otherwise, these issues will only complicate the sale of your business and may discourage potential buyers.
Getting an appropriate appraisal of your business is critical to support the purchase price of your business. Having this appraisal in place ahead of time allows you to realistically value your business when placing it for sale.
Call Us Today for Assistance with Your Business Needs
At Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A., we offer comprehensive legal services so that we can protected your assets and minimize your costs when you are going through the sale of your business. However, we also offer the full range of business-related legal services, whether you are starting, operating, expanding or dissolving your business. We are here to help you navigate the complex legal problems that often during the sale of a business in the most efficient manner possible. Call us at (954) 966-2112 or find out more about our legal services online. Set up a time to talk to us about your legal needs today.