If you are considering a purchase of an existing business, it is important to work with an experienced business attorney. Purchasing a business can be a complex process, and many legal issues can arise in the process of looking for a business to purchase, securing the financing for the purchase, and getting the business running at full strength again after a transition in ownership and leadership.
Due Diligence Prior to Purchasing a Business
Before you consider purchasing a business, work with your business legal counsel to develop and work through a due diligence checklist. You will also need to secure financing for the purchase. Much of the information you will need to secure financing will be gathered in the process of conducting due diligence. Some of the items you will review with your legal counsel are:
- The business’s financial information, including any existing liens, debts, tax returns, expense, profit margins and inventory
- Information about the structure of the business and the business governing documents which will provide you with information about the company’s bylaws or articles of incorporation, shareholders or investors and compliance fillings
- The company’s assets including commercial real estate, equipment, furniture and products
- Information about existing employee and customer data; including disputes and litigation
- Existing business contracts, including employment contracts, restrictive covenants, mortgages, leases, stock purchase agreements, and existing agreements with suppliers or vendors
- Information about pending or ongoing legal issues or disputes involving the company
- Investigate existing intellectual property, such as existing trademarks or service marks
If you or your company are considering purchasing a business. It is critical that you carefully assess all of the potential risks. Given extensive experience in practicing business law, your business attorney will review all the relevant purchase documents, offer guidance on liability and help you minimize the risks. By assessing and minimizing risks, your business attorney can help you better protect your financial interests.