The Process of Buying or Selling a Small Business
Attorney Michael Hynum discusses many reasons why an attorney should be involved in the sale or purchase of a business. For your convenience, the transcription for the video is included below.
The Process of Buying or Selling a Small Business
“Hi, I’m Mike Hynum with Hynum Law in Harrisburg Pennsylvania. Today I would like to talk to you about buying and or selling a business and how an attorney can be very, very helpful on either side of the transaction. When you’re looking at selling a business or buying a business, you have to determine things initially such as:
- Purchase price: is it going to be a stock transaction?
- Is it going to be an asset purchase agreement?
- Or is it going to be some kind of a merger?
There are many questions that have to be answered before you even get into the transaction.
Documents That You May Need
Then you have documents, such as:
- A purchase agreement
- An asset transfer agreement
- A stock transfer agreement
You’re going to have questions like: are you going to have to get some kind of evaluation? As well as are there any kind of real estate holdings involved with the transaction? There are many documents that you are going to have to consider putting together during a due diligence process. Such as:
- Are there any outstanding loans or the property?
- Are there other liens on the property?
- Do you need to do any kind of phase 1 or phase 2 environmental study?
- Is there real estate involved?
- Does there have to be some kind or real estate appraisal?
- Is that going to be part of the same transaction or are they going to be two transactions set up as different entities?
Other Obligations to Consider
There are many, many, many things that need to be done as a matter of due diligence during the course of a sale or purchase of a business.
If there are tenants in the real estate of any property that you’re buying as part of a business transaction, you’re going to want to have certain documents that the tenant is going to sign acknowledging that they are part of the transaction and agreeing to stay in the real estate while the new owner takes over.
And then you have things like, are they going to be subject to the same lease agreement that they’ve had with the prior owner as they are with the new owner or are you going to enter into some kind of a renegotiated lease agreement?
The Transaction Itself
During the transaction itself, there are many documents that are going to have to be signed that you have compiled as part of your due diligence. If you’re doing a financing of the acquisition or sale, you’re going to have even more documents because then you are going to have the bank involved, and they’re certainly going to have their whole list of documents that they want reviewed, drafted, and signed.
Hiring An Attorney to Ease the Process
Having an attorney involved with you as part of the transaction is certainly going to make that part of it a lot easier, as the attorney can deal with the bank and take that hassle off of your hands. So, there are many, many good reasons to hire a competent, qualified, business attorney to work with you prior to, and during, the sale or purchase of any business.
If you’d like to discuss that, or any other issue related to your small business, don’t hesitate to give me a call at (717) 801-1105 or contact me, Mike Hynum: Hynum Law, Harrisburg, Pennsylvania www.hynumlaw.com.”