Buying a Business: Common Dangers and Pitfalls
Anyone who wants to buy a business needs to be cautious before signing an offer. It is critical to consult with a lawyer who is experienced in California business sales to guide you through the process. Very often the business purchase agreements presented by brokers to potential buyers are designed to protect the broker and not the parties to the agreement. By contrast, the California Association of Business Brokers has an excellent standard form that is a good starting point for negotiations.
Structuring the Transaction. First you need to decide the structure of the agreement. Structuring the transaction is not an issue that should be determined by a business broker. You should consult with your tax advisor and attorney to determine how you are going to hold the company. Will you operate the business as an S-Corporation, a C-Corporation, a limited liability company or some other form? Are you buying an existing company or only the assets of the business? Each transaction is different and must be separately evaluated.