Buying and Selling Businesses
The first step in protecting yourself with respect to the transfer of a business is to ensure that a contract has been prepared that protects your interests prior to the closing of the transaction. A qualified attorney can be invaluable in the process of purchasing or selling a business.
The fundamental question with respect to the purchase or sale of any business is whether the transfer is what is commonly defined as an “asset purchase” (where the purchaser is buying only the assets of the company, and not its liabilities) or a “stock purchase” (where the purchaser of the business is buying the stock of the company or the units of membership interests of an LLC, as well as all of the company’s liabilities). There are certain tax consequences or benefits that are contingent upon on whether the transaction is structured as an asset purchase or a stock purchase, and the way certain assets are classified within the contract for the purchase and sale of the relevant business will also affect the purchaser and seller’s future tax consequences.
The assistance of an attorney familiar with the transfer of business interests is essential in negotiating a contract that will protect your interests with respect to the business both prior to and subsequent to closing.