New York Small Business Law

Buying out a Business Partner

Wesley Deaton, a North Carolina Business Lawyer, wrote two good posts on his Business Law Blog on buying out a business partner.  He recommends the following:

1. Get mutual releases

2. Get a release of company liabilities

3. Put the proper corporate filings into place

4. Plan ahead for a possible buy-out

Read:  Buying out a Business Partner, Part 1

             Buying out a Business Partner, Part 2

**This post is for informational purposes only and does not constitute legal advice**

Preparing your Business for Sale/Starting your Internet Business LLC

I've pretty much had given up exercise for blogging.  But since I figured out a way to take blogging to the gym, I've been back.  I make it bearable by listening to podcasts, the audio version of blogs.  Today I listened to (and recommend):

Preparing you Businesss for Sale - An interview with Mathew Ashburn hosted by Rush Nigut

Starting your Internet Business LCC on Internet Business Mastery (part one of two)

Five Steps to Buying a Small Business in New York - Part 5: Closing the Deal

Part 1 here, Part 2 here, Part 3 here, Part 4 here.

Finally, the day of the closing on your small business purchase has arrived. The parties and their attorneys come together for the final handshake on the deal. All of the remaining agreements are executed, documents are exchanged, and money changes hands.

Usually, the sales agreement sets forth when and where the closing is to occur; often this happens at the seller’s attorney’s office.

In addition to the purchase price, there may be a final adjustment of operating expenses, in which the seller is reimbursed for certain expenses that ultimately benefit the buyer. For example, the seller may have paid a certain bill for the entire month at the beginning of the month, while the buyer begins reaping the benefits of the payment upon closing in the middle of the month.

When executing agreements and documents, it is best to ask for duplicate sets of originals, so that you and the seller each have an original set of documents.

The best closings are uneventful, thanks to good preparation and the cooperation of all parties. At times, however, there may be some negotiations about last-minute changes to the documents, or there may be waivers concerning certain closing conditions that could not be met, but the parties are willing to go ahead with the deal anyway.

It is important that your attorney is fully aware of all aspects of the transaction, because last-minute changes and adjustments to a business purchase require quick thinking, sound risk assessment, and good judgment. Similarly, you should be familiar with the transaction in order to make informed decisions about the business deal. While you should rely on your attorney, it is ultimately your deal and your business at stake.

If you need help with buying or selling a business in New York, contact a licensed small business attorney in your area.

Five Steps to Buying a Small Business in New York - Part 4: Documenting the Deal

Part 1 here, Part 2 here, Part 3 here.

The purchase of a small business requires many legal agreements and documents to effect the transaction.  Obviously, you need an experienced attorney to draft and/or review all of these documents and explain their significance to you.

While you were the one to negotiate and reach an agreement on the business terms with the seller, it is your attorney’s job to document such a deal. In addition, he or she should advise you of legal issues and devise agreement provisions that protect you from any problems that may have surfaced during the due diligence and negotiation processes.

I am sure that you have heard the notion that attorneys can be deal-breakers. While attorneys have to be cautious and warn you of pitfalls in the transaction – which is why you might perceive them as deal-breakers – they should not advise you on the purely business issues of the transaction. A good attorney advises you about potential risks and gives you strategies to minimize those risks, but allows you to go forward with the transaction if that is the informed decision you have made.

What are the documents likely to be encountered in a typical small business asset purchase?

Five Steps to Buying a Small Business in New York - Part 3: Due Diligence

(Part 1 here - Part 2 here)

Due diligence is the process of investigating the business you are planning to buy inside and out;  lots of files to look at, numbers to crunch and agreements to review.  You want to know that the price you are paying for the business is fair, and that there are no hidden secrets about the business that could haunt you after you become its owner.

Here is a list of the most common issues for investigation when doing due diligence for a small business purchase:

Five Steps to Buying a Small Business In New York - Part 2: Negotiating the Terms of the Deal

Once you have found a business that seems like a worthwhile acquisition (a “target”), you are ready to negotiate the terms of the transaction.  But what are the typical terms of a small business purchase?  What is there to consider? In other words, what are you in for?

Enter:  the “term sheet,” also known as a “letter of intent” or “memorandum of understanding.” 

Five Steps to Buying a Small Business in New York - Part 1

See Part 2 here; Part 3 here; Part 4 here; Part 5 here;

This is the first in a series of five posts working through the process of buying a small business in New York.

This series will focus on the legal aspects of such a transaction and an attorney’s contribution to a successful business purchase.

Let’s start with an overview of the usual sequence of events when buying a business. Obviously, the first step is to find a business worth buying.