In addition to financial issues and considerations, there are numerous legal issues involved in a transition. An attorney experienced in the nuances of business transitions should always assist the buyer in the following issues:
What is being purchased
• The physical location
• The goodwill of the location (including the client base)
– How the seller transfers goodwill to the buyer
– The terms and conditions of the seller’s non-competition and non-solicitation agreement after he/ she leaves
– Whether the current owner will stay on to help the business transition into new ownership
– Receivables
– Whether the seller is selling stock in the entity owning the business or the assets of the business
Location
• Lease agreements
– Basic terms of the lease
– Duration of the lease
– Options to renew the lease
– Renewal terms
• First Right of Refusal to purchase the real estate
Restrictive covenants
• The seller’s non-competition agreements and non-solicitation agreements, which prohibit former employees, partners, or owners of the business from competing with the new business
Liabilities
• Lien searches on the business’s assets
Tax consequences
• Tax consequences of the transaction
• How much tax the seller will be required to pay as a result of the sale (personal or corporate Goodwill)
Author(s)
Stuart J. Oberman, Esq.
Stuart J. Oberman is the founder and President of Oberman Law Firm. Mr. Oberman graduated from Urbana University and received his law degree from John Marshall Law School. Mr. Oberman has been practicing law for over 30 years, and before going into private practice, Mr. Oberman was in-house counsel for a Fortune 500 Company.
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