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MANNING & MANNING Q&A - LAKE COUNTY BUSINESS JOURNAL Do your homework. The best place to start is consult an accountant or lawyer prior to committing to buy so you are prepared for the challenges ahead. When purchasing a business you can either purchase the assets of the business or the equity interest. An asset purchase is when you only buy the business assets (i.e. furniture fixtures and equipment) which may include the name and goodwill. This is the most common and highly recommended. An asset purchase does not include the liabilities, known or unknown, of the business. An equity purchase is when you buy the outstanding stock or membership interest in the business. In this method you get the business as it exists at the time of closing. An equity purchase requires a great deal more due diligence prior to closing. Other considerations are non-competes or employment agreements with the prior owners to help with a smooth transition. These are just the threshold issues when buying a business that need to be considered.(back) Francis P. Manning |
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