Lynnette Ariathurai has represented business owners and entrepreneurs in California for nearly three decades. Our firm provides personalized, cost-effective guidance and support to clients. If you have any questions about buying or selling a home health care business, we are here to help.
One of the first decisions to make when buying or selling a business in California is to decide if a stock sale or an asset sale is the most advantageous option. With a stock sale, the buyer purchases the seller’s ownership interest in the business—including all intangible assets, existing contracts, and potential liabilities.
In contrast, with an asset sale, the buyer can purchase individual property and assets held by the business. A major advantage of an asset sale is that buyers can reduce their liability risk. However, there are downsides as well. For instance, contracts are often not automatically transferable with an asset sale. So, as the new owner, you may need to negotiate new contracts.
There are pros and cons to each type of transaction. The better structure depends entirely on the specific circumstances. As an example, licenses held by a business do not automatically transfer to the new owner. Both buyers and sellers should consult with an experienced business lawyer before moving forward with a sale.
Home health care is a highly regulated industry in California. All companies operating in home health care in the Bay Area must comply with the rules and regulations of the Home Care Services Bureau (HCSB), including their licensing requirements. It is imperative that you consider licensing when buying or selling a home health agency. You need to know whether licenses are transferable or whether new licensing must be obtained from the state.
Liability protections matter for all types of business—particularly for those in the home health care industry. Before buying a home health care company, you need to be sure that you understand the current structure of the company. Is it a corporation? Is it a limited liability company (LLC)? A business lawyer can help you determine if any changes need to be made going forward.
When buying or selling a home health care agency, it is crucial that the transaction is executed properly. You do not want something to go wrong while buying a business in California. Among other things, buyers and sellers should always work through an escrow company. An escrow company will hold money, handle bulk sale transfer, and make sure that all debts and terms of the sale are resolved before the transfer is finalized.
Lynnette Ariathurai is a business lawyer with the skills and experience to serve clients who are buying or selling companies in many industries, including home health care. Contact us today for a confidential initial consultation. We provide business law representation from our Fremont office across the Bay Area, including Newark, Hayward, East Bay, Union City, San Leandro, Gilroy, San Jose, and Santa Clara.