Thinking of Buying a Business?

You’ve decided to buy an existing small business.  Let’s say the owner has decided to retire and you see this as a great opportunity to  take over a profitable enterprise. You’ve negotiated the purchase price with the help of your accountant and now it’s time to enter into the sales agreement.  How should you  proceed?

As a first step, the seller will have their attorney prepare the sales agreement. Now is the time, if you haven’t already done so, to retain an attorney familiar with buying and selling small businesses.

When I represent buyers, my first concern is that the transaction is structured as an “Asset Purchase” rather than a “Stock Purchase.”  If the business is owned by a corporation, the seller may seek to sell you the stock of the corporation.  As a purchaser, this is risky.  If you purchase the stock of a corporation, in addition to acquiring the business assets, you will also be assuming all of its liabilities, such as unpaid taxes and lawsuits.  Not assuming these potential liabilities is a major advantage of an asset purchase.

If the seller agrees to an asset sale, what provisions should a Purchaser ask to be included in an Asset Purchase Agreement?  Stay tuned for my next post…

About George H. Dippel, Attorney at Law

George H. Dippel has been practicing law for over 30 years. He is a graduate of Cornell Law School and a former partner at the law firm of Rivkin Radler in their real estate/banking department. Mr. Dippel opened his own law offices in 1993 in Bayside, Queens, New York. Mr. Dippel has assisted thousands of clients throughout Queens, Brooklyn, The Bronx, Manhattan, Staten Island, Long Island and Westchester with their wills, probate, trusts, real estate and business matters. In addition to practicing law, Mr. Dippel has taught real estate courses in Long Island University’s paralegal program. He is also a licensed real estate instructor and has taught real estate licensing courses in the New York Metropolitan area. Mr. Dippel is admitted to practice in all New York State Courts and the Federal Eastern and Southern District Courts.
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