Selling a business is a major undertaking both in terms of the logistical elements and because of all the legal issues you must consider. The following are just a few of the legal challenges that could arise during the sale of a business:
- Issues with unpaid tax, especially property tax;
- Dealing with outstanding debts;
- Issues with business succession;
- Handing confidential information, such as trade secrets, copyrights and employee information; and
- Continuing a relationship with previous business contacts, vendors and partners.
It is important to note that just because a business gets sold does not mean that it will close its doors. A retiring business owner may choose to sell a company to a business partner, friend or relative under the condition that it continues to operate in the months and years to come.
No matter the circumstances of the sale, however, you must fulfill certain filing requirements. All the parties involved in the sale must file with local authorities to inform them of the change in ownership, and additional papers may be required for the sale to be approved.
In some cases, you may have to go through additional steps for the sale of the business to be official. The local government could send an inspector to examine the business property before the final sale occurs, and if they uncover any violations, it could be the responsibility of the new owner to address them. An example of such a violation would be the use of toxic materials in the building. If the seller is aware of this issue, it is his or her responsibility to inform the buyer before the sale is finalized.
How an attorney can help
Without the assistance of an experienced corporate law attorney, the sale of a business becomes nearly impossible to navigate in a smooth and legally compliant manner. Every sales contract is different, which means you need a knowledgeable professional on your side to guide you through the process and teach you about how the law affects your situation and goals.
A business law attorney can help you throughout all phases of a business sale, drawing up the contracts and ensuring all elements of the transfer comply with the law. Buyers of a company may also greatly benefit from working with attorneys, as their knowledge and experience will prevent buyers from signing their name on a deal that is one-sided or otherwise unfair.
It is important to comply with all federal and U.S. Virgin Islands territorial rules regarding the sale of a business. If you have any questions about the steps you need to go through to sell your company, work with a skilled commercial transaction lawyer.
Nash Davis is a member of the Corporate, Tax & Estate Planning and Real Estate and Financial Services Practice Groups at BoltNagi, PC, a respected and established business and corporate law firm serving clients throughout the U.S. Virgin Islands.