The Complete Guide to Buying a Business

by Steingold, Fred S.

• ISBN13: 9781413303643
• ISBN10: 1413303641
• Edition: CD
• Format: Paperback
• Copyright: 2005-10-30
• Publisher: Ingram Pub Services

Summary

Provides an overview of the key steps in buying a business, the key legal issues to consider, and important tax considerations.· Offers a variety of approaches for valuing a business, and advice about financing the purchase, structuring the deal, and making it happen.· Provides forms and documents for taking ownership.

Table of Contents

Introduction
Using This Book to Buy a Business
Is This Book for You?	2	(1)
How This Book Can Help	3	(1)
Working Efficiently With Lawyers, Accountants, and Other Professionals	4
Part 1: Overview of the Process
Thinking About Buying a Business
Business-Buying Worries	3	(1)
Which Kind of Buyer Are You?	3	(3)
Three Ways to Become a Business Owner	6	(5)
The Basics of Buying a Business	11	(2)
Key Steps in Buying a Business	13
The Key Legal Issues in Buying a Business
Understand the Differences Between Buying a Business Entity and Buying Just Its Assets	2	(3)
Consider Forming a Corporation or LLC to Buy the Business	5	(1)
Be Clear on What You'll Buy and What the Seller Will Keep	6	(1)
Pay Special Attention to the Transfer of Intellectual Property	7	(1)
Know the Legal Consequences of Not Making Installment Payments on Time	8	(2)
Assure That There Are No Liens on Business Assets	10	(1)
Protect Yourself From Competition by the Seller	11	(1)
Limit Your Legal Liability for Past Obligations of the Business	12	(3)
Comply With State and Local Laws That May Affect Your Purchase	15
Tax-Saving Strategies
Understanding Business Write-Offs	2	(4)
Buying Assets vs. Buying the Entity	6	(2)
Allocating the Purchase Price in an Asset Sale	8	(5)
Writing Off Purchase-Related Expenses	13
Finding the Right Business for You
Before You Begin	2	(1)
Attractive Businesses May Be Nearer Than You Think	3	(4)
You May Be a Strategic Buyer	7	(4)
Finding a Business by Word of Mouth	11	(1)
Finding a Business Through Advertising---Yours and Theirs	12	(4)
Business Brokers Can Help Find Sellers	16	(1)
What Sellers Want to Know About You	16
What's the Business Worth?
There's No Universal Pricing Formula: Many Factors Affect Price	2	(2)
Sales of Comparable Businesses	4	(1)
The Asset-Based Approach	5	(1)
The Income Valuation Approach	6	(2)
Industry Formulas and Rules of Thumb	8	(2)
How Appraisers and Other Experts Can Help You Decide on a Fair Price	10	(1)
Putting Together All the Information	11
Working With Lawyers, Accountants, and Brokers
Lawyers	2	(5)
Accountants	7	(2)
Business Brokers	9
Part 2: Getting Ready to Buy
Financing Your Purchase
Lump Sum Purchase	3	(1)
Installment Purchase	3	(3)
How Sellers Try to Protect Themselves in an Installment Sale	6	(4)
Show Me the Money: Where You Can Get Funds for a Lump Sum Purchase or Hefty Down Payment	10	(4)
The Difference Between Loans and Equity Investments	14
Structuring Your Purchase
Asset Sale vs. Entity Sale	3	(6)
The Seller's Future Role	9	(4)
Restrictions on the Seller: Noncompete Agreements	13	(2)
The Future of Key Employees	15
The Investigation Stage: How Buyers and Sellers Check Each Other Out
Your Investigation of the Seller's Business	4	(1)
Paperwork the Seller Should Provide	5	(15)
The Role of Confidentiality Agreements	20	(3)
Information to Garner From Other Sources	23	(3)
Why and How the Seller May Check You Out	26
Drafting a Letter of Intent
Why Use a Letter of Intent	2	(1)
What to Put in Your Letter of Intent	3	(2)
Why You Should Only Sign a Nonbinding Letter of Intent	5	(1)
Format for a Letter of Intent	6
Part 3: Preparing a Sales Agreement
Preparing the Sales Agreement and Other Legal Documents
Overview of Your Sales Agreement	2	(5)
Related Legal Documents	7	(1)
Well-Drafted Documents Are Crucial	8	(1)
Preparing Your Sales Agreement and Related Legal Documents	9	(2)
How to Prepare Attachments to Your Sale Agreement	11	(1)
Steps in Finalizing Your Sales Agreement and Other Documents	12	(1)
Amending Your Sales Agreement	13
Who's Selling, Who's Buying---And What Is Being Purchased
Naming the Parties	2	(4)
Identifying the Business and What You're Buying in an Asset Sale	6	(6)
Identifying the Business and What You're Buying in an Entity Sale	12
The Sales Price and Terms of Payment
Sale Price: Asset Sale	2	(5)
Inventory: Asset Sale	7	(2)
Dealing With the Purchase of Accounts Receivable: Asset Sale	9	(2)
Sale Price: Entity Sale	11	(1)
Deposit	12	(1)
Payment at Closing	13	(2)
Promissory Note	15	(1)
Security for Future Payment: Asset Sale	16	(2)
Security for Future Payment: Entity Sale	18
Dealing With Liabilities and Representations
Liabilities in an Asset Sale	3	(4)
Liabilities in an Entity Sale	7	(1)
Representations: What They Are and Why They Matter	8	(1)
Seller's Representations	9	(5)
Buyer's Representations	14
Payment for Noncompete Agreements and Consultant Deals
Seller's Agreement Not to Compete With the Business After the Sale	2	(3)
Seller's Agreement to Work for Your Business After the Sale	5	(1)
Current Employees of the Business You Are Buying	6
Other Important Legal Language for the Sales Agreement
Contingency Clause	2	(1)
Closing Arrangements	3	(3)
Dispute Resolution Clause	6	(2)
Technical Contract Clauses	8	(4)
Additional Optional Clauses	12
Signatures on a Sales Agreement
Required Signatures for Sole Proprietors on a Sales Agreement	2	(1)
Required Signatures for an Entity on a Sales Agreement	3	(2)
A Spouse's Signature on the Sales Agreement	5	(2)
Signature Clause in a Sales Agreement	7	(1)
The Typical Formats for Signing a Sales Agreement	7	(4)
Accepting Personal Responsibility for Commitments in a Sales Agreement	11	(3)
Signing the Sales Agreement	14
Part 4: Preparing the Promissory Note and Other Sales Documents
Promissory Notes and Other Installment Payment Documents
The Promissory Note	2	(10)
The Security Agreement	12	(10)
The UCC Financing Statement	22	(1)
Escrow Agreement for Entity Sale	23
Bill of Sale, Lease Assignment, and Other Documents for Transferring the Business
Bill of Sale: Asset Sale	3	(5)
Bulk Sales Compliance	8	(4)
Assignments in an Asset Sale	12	(9)
Transferring an Entity	21	(4)
Assignments in an Entity Sale	25	(1)
Your Entity's Approval of a Business Purchase	26
Documents for Noncompete and Future Work Commitments
Covenant Not to Compete	2	(6)
Contract for Employment	8	(3)
Contract for an Independent Contractor	11
Part 5: Closing the Deal
Preparing for a Smooth Closing
Where and When to Hold the Closing and Who Should Attend	2	(2)
Documents for Transferring Assets	4	(2)
Documents for Transferring an Entity	6	(1)
Handling Last-Minute Problems	6	(2)
Looking Ahead	8
Running a Small Business: Some Legal and Tax Basics
Entity Concerns	2	(4)
Safe Business Practices for Your Corporation or LLC	6	(1)
Tax Basics	7	(3)
Insuring Your Business	10	(1)
Negotiating a Favorable Lease	11	(4)
The Road to Success	15
Appendixes
A How to Use the CD-ROM
A. Installing the Form Files Onto Your Computer	2	(1)
B. Using the Word Processing Files to Create Documents	3	(2)
C. Using PDF Forms	5
B Sample Sales Agreements
Sample #1: Asset Sale of a Restaurant by One Sole Proprietor to Another	2	(8)
Sample #2 Entity Sale of a Bookstore by the Two Shareholders to an Individual	10	(7)
Sample #3 Asset Sale of a Landscaping Business by a Single-Owner LLC to a Partnership	17
C Forms
IRS 8594, Asset Acquisition Statement and Instructions
UCC Financial Statement and Addendum
Index