According to data provided by Small Business Trends, more than 10,000 businesses are sold nationwide each year. The purchase or sale of a business is one of the most complicated transactions. Proceeding without experienced legal representation could be a big (and costly) mistake. Here are three reasons why you should always work with an attorney when buying or selling a business in Ohio.
Due Diligence
Whether you are preparing to buy a company or sell a company, proper due diligence is absolutely essential. For buyers, they need to be sure that the business that they are obtaining is as advertised. Full disclosures regarding the business, its history, its past performance, its assets and liabilities, and its future projections should be obtained and evaluated. For sellers, due diligence is important as well. Before you get deep into negotiations, you need to be sure that the prospective buyer is reputable. Proper due diligence can help to protect you against liability and other risks.
Structure of the Transaction
The specific structure of a business sale is critically important. Broadly speaking, there are two primary options for structuring this type of complex commercial transaction. Each option has its advantages and disadvantages. You may move forward with a purchase or sale as:
- A Stock Sale/Purchase: With a stock sale, the business is purchased as a whole. The buyer receives all assets and liabilities. They can easily take over favorable contracts and assume intangible assets. However, the buyer is also responsible for all liabilities of the business.
- An Asset Sale/Purchase: With an asset sale, the buyer only purchases specific assets held by the business. In some cases, an asset sale may include virtually all of a company’s assets. The buyer does not take on the company’s liabilities. Though, it may also not be able to take over certain intangible assets.
Contract Review and Negotiation
The purchase or sale of a business is done through a contract. While there are certain laws in place that govern contracts in Ohio, the reality is that courts strongly favor upholding the bargained-for intention of the parties. In other words, the specific terms and conditions of the contract are critically important.
A contract for buying and selling a business should always be negotiated, drafted, and reviewed by an Ohio commercial transaction lawyer who has the required experience. Not only will a well-structured contract help to ensure that the deal moves forward as smoothly as possible, but it will protect against the risk of liability or financial losses if something goes wrong.
Get Help From a Cortland, OH Attorney for Buying and Selling Businesses
At The Law Office of John C. Grundy, our Ohio business attorney has extensive experience working with clients who are buying and selling businesses. We are here to ensure that your financial interests are protected throughout the entire course of the transaction. Call us now or contact us online to set up a confidential consultation. We serve communities throughout Northeast Ohio.