You may be thinking you have found the perfect business to buy. Everything looks great, you have your financing lined up, and the current owner seems to be dealing straight with you. Unfortunately, there may be legal considerations you have not thought of.
If you are planning to purchase an existing business, one of the smartest investments you can make is paying for a couple hours with an experienced attorney. If you are still not convinced you need an attorney, consider the following ten questions and how you would answer them.
1. What will happen if there are legal considerations not mentioned by the previous owner such as building or health code violations?
2. Can I be held responsible for debts made by the previous owner?
3. How can I make sure there are no outstanding taxes owed by the business?
4. Can I be held liable for actions of the previous owner in discrimination or employment lawsuits?
5. Can I keep the old owner from starting another similar business?
6. Does owning this business violate a previous no compete agreement I already signed?
7. What is the best legal structure for the business?
8. What licenses will I need?
9. Are there any former employee obligations that I will inherit such as COBRA coverage if I buy the business?
10. If I purchase the inventory of the business, can I be held responsible if the previous owner still owes money for it?
There are many reasons to get the advice of an attorney when going into business, but this is never truer than when you are purchasing an existing business. There are many pitfalls that can bury your business before you even get started and a good attorney can help you avoid them.
This list should not be considered complete; your attorney will ask his or her own questions and offer specific advice depending on your exact circumstances. This should also not be mistaken as legal advice, only a licensed attorney can provide that.
7. What is the best legal structure for the business?
8. What licenses will I need?
9. Are there any former employee obligations that I will inherit such as COBRA coverage if I buy the business?
10. If I purchase the inventory of the business, can I be held responsible if the previous owner still owes money for it?
There are many reasons to get the advice of an attorney when going into business, but this is never truer than when you are purchasing an existing business. There are many pitfalls that can bury your business before you even get started and a good attorney can help you avoid them.
This list should not be considered complete; your attorney will ask his or her own questions and offer specific advice depending on your exact circumstances. This should also not be mistaken as legal advice, only a licensed attorney can provide that.
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