Crafting a sales agreement that will maximize your return on investment and limit liabilities
Large risks are involved when starting a business. According to the Small Business Administration, only half of new businesses survive past five years. One way to reduce the risk of being a business owner is to buy an existing business with proven cash flow or profits. Although buying an existing business reduces risk, it comes with a heavy price. To protect the investment, a purchaser needs to make sure that he receives what he bargained for. This can be accomplished by ensuring that a comprehensive sales agreement is created.
When buying a business there are many issues that need to be addressed. An attorney can assist you by asking the key questions and focusing on the areas that will have the greatest impact on the business’s future success. For example, what parts of the business should you buy? Is it better to buy the existing business entity or should a new entity be formed to only purchase the assets? The manner in which the business is purchased can have a great impact on a business’s future liabilities. The answer to these questions will depend on the specific circumstances surrounding each business purchase. And how you answer can make a huge difference as to your taxes, profits and potential problems down the line.
When buying a business, there is frequently a concern that the previous owner will form a new competing business. To solve this potential, an attorney can create a Covenant not to Compete. This covenant should be an essential part of the sales agreement as it will prevent the previous owner from becoming a competitor for a determined amount of time, increasing your chances for success.
Buying a business without a comprehensive sales agreement exposes you and your business to financial risk. With the help of an experienced Arizona business attorney, you can limit your risks and increase your potential earnings by having a favorable sales agreement that addresses the key issues.
Gunderson, Denton & Peterson, P.C.
1930 N. Arboleda, Suite 201
Mesa, Arizona 85213
Re-Posted from: http://gundersondenton.com/business/buy-existing-business/