If you are looking to sell your business, it is important that you understand your options and their legal implications.
Transfer of ownership
The most common way of selling your business is via transfer of all (or a controlling portion) of the ownership interest in your company. Under this scenario, the business entity continues, but under the ownership and control of the buyer.
This method of sale is much simpler and quicker. If the business is a corporation, the stock certificates are transferred to the buyer and the new owner is recorded. If the business is a partnership or LLC, a contract for the sale of the ownership interest will be executed by both parties. Though much more convenient, this method exposes the buyer to a certain level of risk. The buyer, in this type of transfer, assumes all liabilities of the business, including any liability stemming from the conduct of the previous owner. Additionally, any current contracts to which the business is a party remain in full effect.
Transfer of assets
The other main method of selling a business is via the transfer of the business’s assets. In this situation, each individual asset of the business is sold to the buyer. The business entity is terminated and, unless otherwise agreed upon by the buyer and the seller, the only liabilities assumed by the buyer are any liabilities secured by the purchased assets. Depending on the type and number of assets, this method of sale can be cumbersome and expensive. For example, any assets having a title would have to be registered to the new owner and each business contract would have to be assigned, which may require the consent of the other party to the contract.
Selling your business can be an onerous task, but with the guidance of an experienced attorney, you can limit your risks and maximize your profits.
Contact our office to learn more about selling your business
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