Buying or selling a business can be a major aspect of your experience as a small business owner. Whether you’re looking to expand by buying a new business, or selling all or part of your existing enterprise, a proper understanding of the process can make the transaction smoother.
Buying a Business
If you’re purchasing an existing business as a means of going into business for the first time, you should think about whether the business actually suits your temperament and your interests. You should also consider whether you’re walking into a thriving enterprise or a sinking ship. Another consideration is whether you intend to work with the personnel already on board or start fresh with your own team. Either choice has potential consequences you may not be prepared for. For instance, if you opt to clean house, or even replace top-level management, you may have to deal with expensive severance agreements or face adverse legal claims.
There is also the matter of what type of business you’re purchasing. Signing on as a franchisee takes much of the heavy lifting of marketing and branding off your plate. However, in exchange, you must relinquish a significant amount of control in the running of your company. On the other hand, purchasing an independent company gives you free rein with messaging and day to day operations—along with total responsibility.
If you’ve determined that a company is potentially a good fit for you (either a free-standing business or a franchise), you still must perform due diligence.
✔ Insist on inspecting financial records to ensure that the business is fiscally sound.
✔ Determine whether the company is or has been involved in legal disputes.
✔ Inquire about whether intellectual property rights will be transferred in the sale.
You’ll also want to determine employee compensation and benefits, ongoing vendor relationships, and other factors. That’s where the services of professionals, like the attorneys at Law 4 Small Business, can help. We ask the right questions to ensure that your decision is financially rewarding and legally sound.
Selling a Business
Whether you’re selling your entire company or spinning off a single division, you’re naturally aiming to get the best price possible. However, there are possible considerations you may have overlooked. Specifically, you may wind up owing a significant sum to the IRS. Consulting with a certified public accountant, along with obtaining professional legal advice, can help lower the tax bite.