ARTICLES

Buying a Business

There are many things to consider when purchasing another business. It is not as simple as just making a payment and acquiring the business; there are many considerations that must be involved in the decision.

One of the more frequently overlooked aspects of the purchase of another business is what form the transaction will take. Most buyers favor an asset purchase. It is advantageous for the buyer because they typically purchase some or all of the business’ assets, like inventory or production ability, without assuming any of the debts of the selling company.

Most sellers, alternately, prefer a stock purchase, which is usually what people think of when they think of buying a company. The buyer will own all of the stock in the company, which means they will assume all debts and liabilities that the company previously held in addition to the company’s assets.

A third option, which is not quite a straight purchase, is to merge the companies. This tends to work well for both the buyer and seller because the tax regulations allow for the transition of stock in one company to stock in the new company without penalty.

Contact Us

If you are considering buying or selling your business, it is important to understand the legal options and ramifications of each of your potential actions. Experienced legal counsel can be a very valuable asset when dealing with these issues. For more information, contact the Minneapolis business law attorneys of Skjold ▪ Barthel at 612-746-2560.