This is one of the many reasons why a buyer really needs to have their own business broker.
Let’s say you buy a restaurant on your own, sign the closing agreement, and arrive at your new restaurant only to discover that there isn’t a single chair or table in the whole place. A call to the seller reveals that the purchase agreement didn’t include the furnishings, so the seller packed them up and took them. Now you are stuck trying to refurnish a restaurant that you had assumed came as-is.
How do you avoid this scenario? Use a business broker.
Purchase agreements can be very complex, and if everything you’re expecting to get in the sale isn’t in the agreement, you could end up chair-less. Have your business broker go over your purchase agreement with you and ask lots of questions. You can never be too thorough when it comes to a legal document like a purchase agreement.
What about my attorney? Can’t I just have him look over a purchase agreement for me?
The short answer to this is no.
Only an attorney experienced with business transactions can really be of any help with a purchase agreement. We have seen countless deals fall apart at the last minute when an attorney with an entirely different specialty (like family law or labor law) looks over an agreement and tells their client not to sign off.
Business dealings of any kind always come with at least a bit of risk. Remember that the attorney that helped you with a lawsuit, for example, gets paid to keep you protected from any and all risk. A business broker is there to see that the deal goes through and that all parties have agreed to what is on the table.
This fundamental difference in responsibilities is what prevents your attorney from being of any real help during this process. You should employ the services of a business transaction attorney and a business broker instead, as they are more familiar with the process.
Have your business transaction attorney and your business broker go over with you what parts of the business will transfer to you and what parts will stay with the seller. Typically inventory, equipment and furnishings come with the business, but not always. You should also be clear about what contracts, client lists, etc. you will be inheriting.
Are you a business buyer who has questions about what assets and inventory come with a business when you buy it? Do you need help finding an experienced business transaction attorney and/or business broker? Please leave us a comment or question here, and we will be happy to help.
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