Purchasing an existing business is unique from purchasing a residence. When purchasing a residence, the purchaser is able to tour the property rather quickly, obtain a title search to ensure that the seller is providing clear and marketable title, and obtain an appraisal to ensure that the purchaser is getting value for their money. When purchasing a business, the purchaser is unable to quickly tour the property in its full sense. Not only must the purchaser view the physical attributes of the business, the purchaser must also thoroughly review and research the historical financial documents as well as assess the intangible property of the business.
Purchasing an existing business is similar to a real estate transaction in that some of the business assets may be subject to mortgages or liens recorded in the public records. There may also be tax liens against the current business owners that encumber the business assets. Personal property taxes, sales taxes, and employee withholding taxes may be delinquent or due. If the business owns real estate that is part of the acquisition, a title search is often recommended. An attorney can perform a public records search to assist in disclosing these potential issues.
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