BUYING AND SELLING BUSINESSES

Buying and selling businesses is part of everyday life for many entrepreneurs. In the current economic climate, many business sales involve the acquisition or merger of existing companies, rather than the full sale of a business, or the purchase of assets only. An experienced business law attorney should be retained to assist you during any business or asset purchase or sale.

 

Types of Businesses

 

There are three main types of business entities which include the following:

 

  • Corporation

  • Limited liability company

  • Partnership

 

Each type of business entity has a unique structure for its formation, its agreements, and its ongoing business requirements. Owners will often pick a certain type of business entity based on their needs and the requirements of their business. The type of business entity will come into play when future owners wish to purchase a business, or when existing owners wish to sell a business.

 

Buying and Selling Businesses

 

The buying and selling of a business depends largely on the type of business entity. However, regardless of the business structure, the sale or purchase of a business is not the typical sale and will involve the sale of intangible objects such as intellectual property, goodwill, websites and domain names.

 

Careful consideration must be given to the allocation of the purchase price, assets and liabilities included and excluded, accounts receivable and payable, payment of the purchase price and any financing, collateral and security agreements, representations and warranties of buyer and seller and deposits and defaults.

 

One of the main points of any purchase and sale agreement involves the due diligence process. Due diligence inquiries will allow the purchaser to ask detailed questions of the seller regarding the entity structure, financial history, and legal matters. The impact of these answers could influence the structure of the purchase and sale agreement, as well as the valuation of the business entity.

 

The due diligence phase of business sales is a vital part of the transaction because it offers the purchaser the ability to correct any inconsistencies on the business’ books, and provides reassurance to the buyer of the business’s current financial state. The due diligence process provides the buyer with a roadmap of the company and will help the buyer map out future considerations.

 

If you have any questions regarding the buying and selling of a business, do not hesitate to contact our offices. We have over 25 years of experience assisting buyers and sellers with stock purchases and sales, asset purchases and sales, due diligence reviews, collateral and security agreements, promissory notes and other business and commercial matters. Our office will assist you regardless of what role you play in the transaction and will advise you on the inherent issues with the sale or the purchase of a business.

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484-562-0473

We serve the following localities: Bucks County including Bensalem, Doylestown, and Morrisville; Montgomery County including Ambler, Collegeville, Glenside, and Norristown; Philadelphia County including Philadelphia; Atlantic County including Atlantic City; Burlington County including Burlington, Marlton, and Mount Holly Township; Camden County including Camden; Cumberland County including Bridgeton and Vineland; Gloucester County including Deptford Township, Sewell, and Woodbury; and Salem County including Pennsville Township and Salem.

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