rightmidC A Mather Incorporated
Sale & Purchase Of Business

 


This is a different ballgame. The legal issues are complicated. Both parties are at great risk. Unless it is a cash deal the seller is terrified. The buyer should be terrified. Let us assume that the deal is done in good faith.(Not a wise assumption)

 

The seller wants to be sure that it gets it's money at the end of the day, with no comebacks, and the buyer wants to be sure that it is going to get all that was represented. It is imperative that an agreement for the sale/purchase of a business be reduced to writing.

 

A book could be written on this. There are so many areas of law that apply. Much as we would like to, we cannot deal with all the pitfalls here. Don't be penny wise and pound foolish, consult your attorney and your accountant before signing anything. This applies to both parties. If this reads like a promotion, do your own thing, you may regret it.

 

Understand very clearly what you are selling or buying. Is it a company or a close corporation,  that is being sold/bought? It might be that the business only is being sold/bought. The buyer could end up with a massive tax liability, not to mention any other liabilities.

 

Probably the best way to deal with this type of transaction is to resort to a checklist for both buyer and seller.

 

The Seller's Checklist

 

  • What am I selling?
  • Cash or down payment plus instalments?
  • Is the price realistic?
  • If instalment is the buyer able to run the business as well as I have?
  • What safeguards do I have If buyer messes up?
  • I must have access to books until full price paid.
  • What about staff and their benefits?
  • To what extent am I prepared to warrant the performance of the business?
  • Leases on equipment-who is responsible?
  • What security do I have?

 

 

The buyers checklist.

 

  • Much of the above.
  • Have I done everything that I can to check all that seller has told me about the business?
  • How do I protect myself if seller has not given full disclosure?
  • Check that no super highway is planned going right past the premises.
  • Will I get the sellers co-operation to ensure that customers will stay with me?
  • Are there any worms in the woodwork?
  • Have I got enough working capital?
  • What if the seller decides to take my money and then compete with me?

 

The above is not exhaustive, many other things should be considered. Speak to your attorney.

 

 

 

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