Understanding the two types of business purchases and sales
In general, there are two ways to buy or sell a business:
In an asset purchase, the buyer purchases some or all of the assets of the business. The buyer does not acquire an ownership stake in the company that owns those assets, only the assets themselves. This method generally favors the buyer because any existing liabilities that the business may owe are not transferred to the buyer. Such liabilities could include contracts, lease obligations, issues with employees and tort liabilities for negligence, among other obligations.
In an entity purchase, also known as a stock purchase, the buyer purchases the company that owns the business. That may mean buying all of the stock in a corporation, all of the membership interests in an LLC, or all of the partnership interests in a partnership, depending on how the company is structured. This type of purchase generally favors the seller because the buyer assumes any existing liabilities, known or unknown.
How our law firm can help with your sale or acquisition
If you're considering purchasing a business, consulting an experienced Mesa business attorney from our law firm can make a huge difference. For example, our attorneys can help you investigate the business entities involved to make sure they are in good standing. We can thoroughly research any judgments, tax liens, and bankruptcies that might affect the business you are buying and insist that they be resolved before the purchase is completed.
Whether you are buying or selling a business, it is imperative that you have good legal advice throughout the process. The terms of a purchase and sale are always negotiable between the buyer and seller, and a strong legal advocate in your corner will help you reach an agreement that meets your needs and minimizes your liability.
Don't go into a business purchase or sale alone. Trust the business law attorneys at Brown & Jensen to protect your interests. Contact us today for a free consultation.