For simple businesses, there is a simple way to purchase and sell. Both the seller and the buyer would be fools to transfer the business on a hand shake or without a proper legal document. The California Associationa of Realtors developed an excellent form document; Form BPA. For relatively little expense, a business can transfer to a new owner with both the buyer and seller being protected by a well written legal document. Lawyers, escrow companies, real estate brokers, etc… can open an escrow for the transaction.
Things to consider when buying or selling a business:
- Purchase price is not the only payment issue. Most purchases are not all cash. Decide on initial deposit, payment plan, interest rate, etc…
- Form of ownership of the business. Corporation, LLC, etc…
- Inventory – Many people say everything is included that has to do with the business. GET IT IN WRITING. Do an exhaustive inventory of the business assets.
- Consulting/ Training- The purchaser is going to need answers from the seller. Get that in writing.
- Agreement not to compete- The purchaser does not want the seller to open a shop next door and compete.
- Lease, Purchase or Real Property- Sometimes the real property is sold along with the business. However, usually a lease is involved. If the business location is important (retail, restaurant, etc…), the buyer should get a lease with the landlord during escrow. The purchase should be contingent on the purchaser obtaining a lease.
MacFarlane Real Estate, Inc. handles business transactions.