Buying an existing business offers an opportunity to experience the thrill of business ownership without a lot of the headache and frustration that comes along with starting a business from the ground up. Typically, the process will involve a great deal of discussion between buyer and seller, and some back-and-forth over general aspects of the sale.
But businesses should not just be sold via handshake, which is where the purchase agreement comes into the picture. A purchase agreement is the formal document in which the details of the sale are put down on paper—and because it’s considered a legal contract, it’s generally good policy to involve an attorney in the drafting process. This helps ensure everyone’s best interests are being taken into account.
Covering all your bases
A purchase agreement should include a number of details related to the purchase and sale of the business, not least of which are the amount of the sale and the method of payment. It should also include a variety of terms and conditions, such as an outline of any actions that need to be taken prior to the sale, a thorough accounting of all aspects of the business that are being purchased (such as assets, equipment or inventory) and a plan for handling any disputes that result from the sale of the business.
In addition, the purchase agreement will likely include other documentation related to the transaction that needs to be transferred from seller to buyer. Chief among these are corporate documents, including articles of incorporation and bylaws, as well as tax and financial documents, leases, property deeds and other documents that the new owner will need.
However, there are also other factors that you’ll likely need to be thinking about when drafting a purchase agreement, many of them things that might not immediately come to mind. For example, if you’re buying a business, does it have a list of regular customers whose information you’ll need? Does the business have valuable intellectual property without which the business would lose money or its reputation? These are factors that an attorney with a background in navigating and drafting purchase agreements can help you identify and make sure are included in the purchase agreement.
Working with a professional
Buying a new business can be an exciting process, but it can also confusing, and it’s not something you want to get into without the counsel of an experienced business law attorney. A skilled legal professional with experience working with the sellers and buyers of businesses can be very helpful when drafting a purchase agreement and working through the process of buying a business, and can also help you ensure nothing has been forgotten. Although U.S. mainland residents looking to buy a business in the USVI may already have trusted, competent business counsel, local counsel in the USVI is imperative for a smooth transaction due to many unique local customs and requirements.
BoltNagi is respected and well-established business law firm serving corporations and partnerships throughout the U.S. Virgin Islands.