The process of buying a business can be challenging and, possibly, a bit daunting. Throughout the process, a buyer must carefully review and understand a variety of legal and financial intricacies.
Key Considerations for Potential Buyers
Buying an existing company can eliminate some of the risks associated with starting a business from scratch. However, the main issue for a prospective business buyer is determining exactly what they are buying. This calls for thorough due diligence with assistance from professionals who understand business law.
Before taking steps towards purchasing a business, be aware of these three key considerations.
#1 Identify Key Professionals
Set yourself up for success when deciding to purchase a business. Begin by identifying key professionals who can guide you throughout the process. A solid first step would be to consider a broker who can help with business acquisition as well as a business law attorney who can assist with the legalities.
If you have one or more companies in mind, consider putting a small team of experts in place to support your goals. Other important professionals to include would be an accountant and a financial consultant. These experts are crucial for the duration of the due diligence process, and they should be knowledgeable about a variety of topics that will advance your interests.
#2 Determine What You Are Purchasing
Inquire about the structure of the business. If a partnership owns the business, get clarity on whether the parties are continuing the agreement or ending it with the sale.
You have options when buying a business: either you acquire the company’s assets outright, both tangible and intangible, or you buy the equity in a corporation or limited liability company. This type of decision, along with many others that will need to be made, should be addressed with thoroughness and transparency and with the assistance of legal counsel.
#3 Complete Due Diligence
To exercise due diligence, you should examine and confirm each piece of information you have been given about the company. Due diligence validates that the company is worth what you will be paying for it and enables you to thoroughly examine the financials and other records.
A significant number of legal documents need to be signed and filed, and a thorough review of the company’s finances should be completed. This is a crucial step in a successful purchase process for businesses. A list of fundamental due diligence documents can be provided by your attorney.
Get Legal Help
When purchasing a business, it is recommended that you seek the advice of an experienced business attorney. Whether you have bought or sold a business before, there may be more than meets the eye involved in each individual transaction, and every detail should be viewed with extreme diligence.
If you need assistance with a business purchase, our attorneys will answer your questions and provide the guidance you need. Contact us today to schedule a confidential consultation.
