Purchase and Sale of a Business: Important Lesson

This blog today will be brief, but I wanted to comment on the purchase and sale of a business. Often times, I hear small business owners that regret not having an attorney to review their purchase and sale agreements. The purpose of a business attorney is to safeguard a small business owner from making a major mistake. The common mistake that I see and key lesson is either a purchaser purchases the stock of a Corporation or purchases the membership interest of an LLC. This is problematic because the purchaser assumes the liabilities of the previous business owner. I have talked with many small business owners and they have found that small business owners owe tax liabilities and get sued. For example, I have a current client that sold his business interest to another person. The person, the purchaser, bought the shares of the Corporation. Now, the corporation and the former business partner are in litigation because of an unpaid credit line. Now, if the purchaser would have done an "Asset Purchase Agreement", which is essentially purchasing the sales of the Corporation and/or LLC, the new purchaser would not be liable for the old debts. Instead, a Stock Purchase Agreement assumes all the liabilities of the previous business partner/seller.

Sean Robertson is an asset protection and business planning attorney concentrating in small to medium sized business law, corporate structure planning, and purchase and sales of businesses. Sean Robertson may be reached at (312) 498-6080. Check out our website at www.RobertsonLawGroup.com.

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