Getting Ready to Jump

We count ourselves very lucky.  We help people buy and sell businesses.  It makes for busy year-ends, but it is really fun to assist a seller see the pay-off of their hard work and a buyer start a new adventure.  It is truly awesome to see people take the leap.

The first question that needs asking and answering is:  So what are you buying?  Sounds easy, right? “Uh, the business…” is not an uncommon answer.  But it needs to be a bit more clear.  The very first thing that needs to be sorted out is if it is an asset sale or a membership unit sale.  In other words, is the stuff used to operate the business being sold, so a new company starts running the business (a/k/a an asset sale) or does the same company run the business but the owners of the company change (a/k/a ownership sale)? 

Let’s extrapolate a bit more.  Let’s say I want to sell my law firm (No, I am not actually doing it.  Don’t panic.), but let’s pretend.  You want to buy it.  So what are you buying?  Do you want to buy my interest (and the interests of G and S) in the LLC?  You get to step right into our shoes.  All of the contracts are in place, the employees are here, and the liabilities of our past 3 years are waiting for you to worry about.  So, yeah, easy to step in, but you get the full freight – warts and all.  If I didn’t pay rent for the past 6 months, that’s now your way past due bill.  Maybe not how you want to start your reign.

But what if you already had a service corporation in place or want a new LLC?  You could just buy the assets of the firm.  Computers, electronic stapler, LOTS of manila file folders – sure.  But also the client list, our awesome logo, website, and yes even the super secret stash of Peanut Butter M&Ms.  You do have to start your own entity, wade through to see which contracts you want, and get permissions to do so.  But, as Jeff often tells me, maybe it isn’t a bug, but a feature.  You get to choose how your business is ran rather than just take over someone else’s approach.

So yes, you are looking at buying a business, but go that next step and think about what exactly you are buying.  Then we can talk about how.  

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