Purchasing or Selling a Business in Illinois
Today's post is on the legal considerations when purchasing or selling a business. There are several primary legal concerns that must be considered. The first legal consideration is liability concerns. There are two (2) types of Sales of a Business: (a) Asset Purchase Agreement and (b) Stock Purchase Agreement.
An Asset Purchase Agreement is a legal agreement to purchase the assets of an existing business. A purchaser does not have to purchase all the assets of a business. For example, a purchaser may want to purchase the name of the business, the goodwill, the accounts receivable, and the commercial lease of a business. These assets will be given a seperate value for tax purposes such as goodwill may be worth $2,000, the accounts receivable may be worth $15,000, etc.
The second legal consideration is how will the business be paid for. Such questions include whethe the Seller will provide seller financing of the business or whether a Bank loan will be used to purchase the existing business. The Asset Purchase Agreement shall typically give a buyer the ability to cancel the sale of the business if they cannot pursue proper financing through the Bank at reasonble terms. Quite frankly, a Seller that is providing seller financing will most often ask for a personal guarantee for the prospective buyers. The purpose of the personal guarantee is to sue a buyer to recover the Seller's lost revenue including attorney's fees and reasonable expenses.
In conclusion, it is critical to have an attorney if you are purchasing or selling a company. Often times, the attorney's job is to negotiate key terms that must be negotiated or to make sure a seller or buyer's legal rights are protected in case things go wrong. An attorney's job is to provide his or her client with protection in case the worst case scenario occurs.
Sean Robertson is a business and tax attorney based in Joliet and Naperville, Illinois. Sean Robertson has over nine (9) years of legal experience as an attorney and business counselor. Sean Robertson may be reached at 815-582-4990 (Joliet) or 630-800-2033 (Naperville) or via email at Sean@RobertsonLawGroup.com. Our website is www.RobertsonLawGroup.com.