A number of business deals end up remaining in limbo and even get canceled when the buyer is does not handle the legal side of the deal with proper sincerity. Ignorance is not bliss when you’re about to spend a healthy amount of money in buying a business that is supposed to justify its selling price. This is exactly why when you need to know how you can prevent any legal trouble by making sure that the all the required legal documents are ready to go. With that in mind, here are the legal documents you need to ensure you check before you go ahead with buying a business.
#1. Don’t forget to go through the lease documents:
Most business owners do not own the property their business is located on. In such a case, there should be a lease agreement between the landlord and the business owner. If you’re about to buy such a business, it’s your foremost duty to make sure that these legal documents are thoroughly checked before the deal is finalized. Traditionally, you should be able to use the same property the previous business owner used with an updated lease once you buy that business. However, you must not forget to get everything verified in order to avoid any conflicting situations in the future. This is especially important if you a business in a local area. For example, if you are looking at businesses for sale in Michigan, make sure that you are aware of any state or local restrictions that would prevent or hamper you from taking over the lease agreement with the landlord once the deal is finalized.
#2. Notice of sale to seller’s creditors:
In some areas, a seller’s creditors need to be informed about the sale before the ownership shifts to the buyer. This is to ensure that these creditors do not end up causing any obstructions to the sale if everything else goes as planned. Ignoring a notice of sale to the creditors can make a buyer get into some serious trouble as the deal can’t be finalized regardless of what is signed.
#3. Negotiating the letter of intent is crucial:
The letter of intent is unarguably one of the most important legal documents when it comes to buying and selling of any business firm. This document handles all the crucial details regarding the sale, including the mentioned selling price. All the terms and conditions regarding the business sale are to be clearly mentioned in this document. There might also be a clause that specifies a termination fee that you’d have to pay as a buyer in case the deal ends because of you.
#4. Make sure to get an indemnity from your seller:
This is yet another thing to ensure if you’re a buyer looking for a business to buy. Laws and regulations regarding buying and selling of businesses are fairly different depending on the area, socare should be taken accordingly. This document is signed by your seller in order to provide you with the assurance that you don’t end up getting sued as a result of the past operations handled by the previous owner. At the same time, an indemnity needs to be given to the present owner of the business if you’re planning to buy the ownership of the business from them.
#5. Any pending lawsuits or legal proceedings:
Last but not least, crosscheck any pending lawsuits against the business owner before you acquire the business. If ignored, these pending proceedings can end up landing you into a huge amount of legal trouble that might waste a significant amount of your time and money. It doesn’t matter how much time it takes to clear out all these details, you must proceed with the business deal only if your attorney gives you the green light.