Buying Or Selling A Business FAQ

Do I need an attorney to purchase a business?

It is important that a buyer consult with an attorney to advise them of the risks of liability in purchasing a business or its assets, and to understand the laws applicable to the transaction. Also, it is best to have an attorney review or draft the purchase agreement before you sign, whether it is to purchase the assets or the business, to ensure that the buyer gets what they bargained for, with minimal risks of liability.

What is the difference between an Asset Purchase and a Business Purchase?

Simply put, the purchase of a business means that the buyer will stand in the shoes of the seller once the sale is complete, they will own the business. In general, the business remains the same, employees remain the same, tax identification does not change, and most if not all of the contracts of the business remain, as well as the assets and debts of the business remain. Whereas, an Asset Purchase is when you purchase only certain assets of the business, and limit the liability purchased from a business. In actuality, there are many laws applicable to a purchase of a business and its assets, and many hidden risks of liability in a transaction that seems simple. An attorney can advise you as to whether you should purchase the assets of the business or the business, as well as the laws applicable to the transaction, and how to minimize your risks of liability to obtain the benefits of your bargain.

What is a Bulk Sale transfer?

A Bulk Sale transfer is a sale or transfer of all or substantially all of the assets of a business not in the ordinary course of business. The Bulk Sale laws exist to prevent secretly selling of the assets of the business outside the ordinary course of business, without notice to the creditors. These laws generally provide for notice to the creditors and a limited opportunity for creditor's to advise the parties of the debts owed to that creditor, as well as the liability transferring to the buyer. Whether you are a seller or a buyer of a business, you should consult with an attorney regarding the Bulk Sale laws, including the risks and shifting of the risks of liability concerning the existing debts of a business.

Did I obtain the company's license when I purchased a licensed business?

In general, a company's license is not for sale. The license belongs to the license holder. Generally, if you purchase a licensed business, you do not automatically get the license to operate the business, nor is the license an asset that can be sold. However, many licenses can be transferred, upon meeting the requirements of the license, filing the appropriate documents, and payment of the fees to the government overseeing the license, as well as a waiting period before the license may be transferred. You should consult with an attorney before buying a licensed business, to understand the ability to and the process of transferring the license of a business you are purchasing.