Blog

March 12, 2019

Why Buy Assets Instead of Corporations

When you buy a business, you have a choice, should you buy the assets of the business or buy the legal entity, typically a corporation?  In most sales, it is better for the buyer to buy the assets.  Here are the reasons why. Liabilities – If you buy the corporation, you are assuming any legal liabilities that the corporation has, or will have, based on actions taken before you bought the business. Here are some of these.  Liability for unpaid income taxes can go back seven years.  Another liability can be a workmen comp claim or additional insurance premiums due.   Other potential claims are human relations related, such as a claim of discrimination or sexual harassment.   Or, product liability claims […]
March 12, 2019

What Assets are Included in the Sale of a Business?

This is probably the most asked question when I meet with a business owner thinking of selling their business.  It’s a good question.  What is being sold, or included in the sale price, depends on how the business is being marketed.  However, there are some things that can be said about what is usually included in the sale of a business. First, the seller is typically selling the assets of the business, not the corporate entity.  The primary reason is to avoid potential liability, by the buyer, for the actions of the seller’s corporation before the business was sold.  In addition, in an asset sale, the buyer and seller can agree to a price for the assets of the business […]
March 12, 2019

Buying or Selling Business Assets: 6 Key Questions

“You wouldn’t buy a pig in a poke…”. A great saying which can be applied to business capital. Buying business assets is often synonymous with a new professional life. From the seller’s point of view, it represents new opportunities or investments. So that this takes place in optimal conditions, and doesn’t become a nightmare, caution and patience should be exercised. Here are 6 essential questions to ask. Firstly: what is meant by business assets? Business assets are things of value that are used in a business.  The assets are of two types: Tangible assets, like business vehicles, equipment, supplies, and buildings Intangible assets, like copyrights, patents, and trademarks. Business assets can be transferred (sold) to a third party, who is […]
March 12, 2019

What an Asset Sale Involves

The Asset Sale In an asset sale, you are selling the different assets that the business owns. Assets may be: tangible, such as land, buildings, equipment, cash, investments, and inventory, intangible, such as the goodwill your business has built up during the years of its operation, customer lists, patents, copyrights, and trademarks. If your business is not incorporated (e.g., a sole proprietorship or partnership), an asset sale is the only selling option since there are no share certificates of ownership to transfer in a sale. To come up with a selling price for the business, the different assets of the business are individually appraised. How do you know, for instance, that your business’s goodwill is worth $20,000? And even if you think so, […]