Buying or selling a business marks an important time. Parties may try to conduct the transaction with the assistance of a convenient, though less experienced, lawyer – or no attorney at all. A law firm deeply knowledgeable in business law can spot less-known pitfalls that prove critical, from potential debt associated with the company someone seeks to buy to legally ensuring the seller gets paid after a number of scenarios.
Hoegen & Associates, P.C., in Wilkes-Barre, PA, can assist you with the buying and selling processes. Reach out today!
1. Business Lawyers Help You Better Understand the Difference Between the Business and the Business’ Assets
Sorting and understanding the difference between the business and the business assets is critical. Some differences are more easily identifiable. Others: less so.
When the company you seek to buy or sell is a sole proprietorship or a partnership, the path is clearer. You could buy the assets – “the pieces” in simplest terms – and the business as a whole because of the size and simplicity. However, as you look at something larger, you could find an entity operating the business (for example: a limited liability company or a corporation).
In many deals overall: the buyer wants to purchase the assets and the goodwill, which, roughly speaking, is the business. The right lawyer can help you with both facets. Additionally, a business might have debt that it still needs to pay off. An attorney can help you separate the debt from the company or the assets.
2. They Help Line Things Up & Secure the Transaction
Home mortgages or auto loans serve as decent comparisons when discussing the purchase or sale of a business or assets. You will find numerous instances in which the buyer does not have all the money available for the purchase, seeks outside funding, and works with the seller to set up a series of payments over time.
A seller should get the buyer’s commitment to pay on a promissory note – with a written security agreement and done with Pennsylvania state government. In doing so, the seller can repossess business assets if the buyer fails to make the necessary payments. Also, the seller moves toward the front of the line among creditors who come looking to collect if the buyer ultimately falls apart.
An expert on commercial law (especially in Pennsylvania), Hoegen & Associates can greatly reduce your chances of ending up in a financial quagmire if you look to buy or sell a business. Let us help with the transaction. Contact us today.
3. They Assist in Tax Matters & Related Headaches
Headaches can also arise when the buyer and seller agree on a purchase price without successfully connecting that number to different, specific areas – such as equipment and fixtures, accounts receivable, and other items. Tax professionals and legal consultants can help ensure that you do not run into serious consequences regarding income-tax payments, capital-gains treatment, and other situations. A lawyer can assist you in drawing up a contract that leaves virtually no room for misunderstandings and gives you greater peace of mind. And if you do up with snags, the attorney can help you identify the best solution.
4. They Help Prevent the Seller from Becoming a Competitor Soon After
Let’s say you buy a business with an inexperienced or no lawyer and fail to have a provision that prevents the seller from opening up shop afterward as, now, one of your competitors. We strongly recommend you hire a lawyer for prevention purposes, so that they can properly draft a non-compete covenant.
A knowledgeable attorney can better ensure this item is well received by the courts. A poorly planned and constructed covenant could prove too loose or too rigid, or severe, such as limiting the seller so much that the person can barely return to make a living after the transaction. From understanding past cases to important factors such as the given industry or geographic scope, the right lawyer can greatly help you. Without a well-crafted and accepted covenant, a seller could enter your market as a formidable force – one that clients you might inherit proceed to jump ship to return to a familiar face.
An Informed, Steady Hand
How someone buys or sells business assets can have a seismic impact that spans areas such as finances, clientele, your ability to compete and brand yourself, and much more. Details are critical, from understanding the less-known differences between assets and the business to how to stay clear of related issues come tax season.
Choose an experienced lawyer. Turn to Hoegen & Associates. With extensive knowledge of the law and built on integrity and dedication, we are happy to assist you. Reach out today.