Whether you’re buying or selling a business, there are critical facts you should know first. Doing your due diligence beforehand by gathering information regarding the company’s financial history, employee files, any past lawsuits and contracts with other businesses, and the business’ leases. This information will help you gain a better understanding of the value of the business you’re looking to buy or sell, and possible contracts that will need to be terminated or put into place. You should also know the kind of acquisition you’ll be looking for, like a merger versus a final sale.
Buying or selling a business is a complicated process that often times involves a significant amount of money. Because of this, we highly recommend working with an experienced business attorney to help you navigate the legal paperwork and to ensure the timely and lucrative sale or purchase of your business. Contact one of our attorneys to represent you in these important transactions to keep you and your business protected.
Why Hire an Attorney When Buying a Business
Buying a business is one of the most significant financial decisions you’ll make, and there are countless details that can make or break the deal. An experienced business attorney helps protect your investment by identifying risks, negotiating favorable terms, and ensuring the transaction is structured properly. Here’s what an attorney can help with:
- Due diligence. Before you commit, an attorney reviews the business’s contracts, leases, employee agreements, litigation history, intellectual property, and other legal documents to uncover potential liabilities or red flags that could affect the value of the business or create problems after closing.
- Deal structure. Should you buy the company’s assets or purchase the entity itself? Each approach has different implications for liability exposure, tax treatment, and what you’re actually acquiring. An attorney helps you understand the trade-offs and structure the deal in a way that protects your interests.
- Purchase agreement negotiation and drafting. The purchase agreement is the centerpiece of the transaction. An attorney drafts or reviews this document to ensure it accurately reflects the deal terms, includes appropriate representations and warranties from the seller, and provides remedies if the seller has misrepresented the business.
- Reviewing and assigning contracts. Many business contracts—like leases, vendor agreements, and customer contracts—require consent to assign to a new owner. An attorney identifies which contracts need attention and helps ensure you’ll actually receive the benefit of the relationships you’re paying for.
- Lease review and negotiation. If the business operates from a leased location, the lease terms can significantly impact your operations. An attorney reviews the lease for unfavorable terms, assignment restrictions, and upcoming renewals or rent increases.
- Employee and independent contractor issues. Are key employees willing to stay? Are workers properly classified? Are there employment agreements, non-competes, or benefit obligations you’ll inherit? An attorney helps you understand your workforce-related obligations and risks.
- Intellectual property transfer. If the business owns trademarks, copyrights, patents, or proprietary processes, an attorney ensures these assets are properly transferred to you and that you’re not inheriting any infringement claims.
- Regulatory compliance. Depending on the industry, there may be licenses, permits, or regulatory approvals required to operate. An attorney verifies that the business is in compliance and that those approvals can transfer to you as the new owner.
- Financing and security agreements. If you’re financing part of the purchase or the seller is providing seller financing, an attorney reviews loan documents and security agreements to ensure the terms are fair and clearly defined.
- Closing documents and process. An attorney coordinates the closing, prepares the necessary documents (bills of sale, assignment agreements, resolutions), and ensures funds and ownership transfer correctly.
The Experienced Attorneys and Paralegals at IBC Law Firm have a depth of knowledge of the state of business in the Phoenix market. We understand the shifts the market is making in recent years, and can counsel you appropriately. We have helped our clients buy and sell hundreds of local businesses from grocery stores and pet shops, to hair salons, landscaping companies, wood-working businesses, supplement developers, online e-commerce platforms and more.