Buying a business requires proper planning and legal guidance to ensure the process goes smoothly and your risks are minimized. There are obvious factors to consider such as the type of business you may want to purchase and your own level of experience in that industry. After you carefully evaluate these, however, make certain you also take the following three essential steps should you choose to move forward with purchasing a business.
Essential Steps Before Purchasing a California Business
- Hire an experienced California business attorney. While this may seem obvious, many people consider a business purchase a simple transaction that does not require the help of a professional. However, there are numerous legal considerations involved in such a transaction, and the right attorney can help you protect your interests, including successor liability and the potential for indemnification of such risks.
- Conduct thorough due diligence. Understanding all of the details involved with the business of your choice will be your primary goal. You and your team should establish a plan to thoroughly research the business’ finances to ensure viability. You may want to bring in an accountant at this point to learn more about any outstanding debts, what is included in accounts payable and whether the accounts receivable are properly stated. A review of tax records can also help uncover potential liability down the road. Learn everything you can about the business’ obligations and prior compliance. Review current contracts, licenses, and leases. HR-related documentation should be reviewed as well. It is also important to obtain a certificate of tax clearance from the Board of Equalization to protect yourself from having to pay any deficiencies in sales or use taxes.
- The purchase agreement should be carefully drafted. The seller may have a bill of sale prepared, but simply signing it is a mistake. Your small business attorney should prepare a detailed agreement between the parties that clearly identifies what is being sold as well as the liabilities each party assumes. Make certain any warranties or indemnity promises are included in the agreement.
After the sale is complete, you will be quite busy with your new company, but partnering with your small business attorney to proactively assist with legal issues is wise and often eliminates the potential of future litigation. You may also need an attorney who has employment law expertise, especially if you intend to make changes in staffing.
Experienced San Diego California Business Attorneys
Gehres Law Library can help you evaluate your business venture opportunities and ensure the agreements involved protect your interests. Our business attorneys are positioned to aid business owners in a variety of practice areas including business law, employment law, contracts law, intellectual property law, and others. Contact us today for a free evaluation.