Buying a company’s assets allows you to purchase the most desirable parts of a business while leaving debts, taxes and possible lawsuits behind for the seller to deal with. That is arguably the smartest way to buy a business and may offer the greatest opportunity for success. For example, an owner of a small group of restaurants may want to purchase another restaurant for sale. But the prospective buyer may really only want the location -- and not contractual obligations with vendors or leased equipment. Good advice is helpful when attempting to purchase a company for its assets only; you should form a small team to help you negotiate a good deal.
1. Hire a business broker. Brokers charge 5 to 10 percent of the purchase price for helping with a purchase, according to Entrepreneur.com. That’s potentially a significant amount of money. However, a business broker can identify business owners willing to sell a company’s assets -- while retaining the debt to pay on his own. Finding an owner willing to do that is not always easy, and that underscores the value of a broker. In some instances a business owner selling the company’s assets may walk away with nothing after using his proceeds from the deal to pay off debt not included in the deal.
2. Add other important players to your acquisition team, including an accountant and an attorney.
3. Direct the business broker to identify businesses structured as limited liability companies, sole proprietorships or partnerships. Entrepreneur.com reports that the legal structure of these companies makes it possible to purchase only the company’s assets. Purchasing other types of companies may require you to accept the company’s debt as well as the assets. Have your attorney and the broker screen potential acquisition targets to confirm the proper legal structure.
4. Review profit and loss statements, balance sheets and other financial information for the business you choose to purchase for its assets only. Direct your attorney to create a sales agreement that clearly outlines what you are purchasing. For example, the contract may stipulate that you are purchasing a building and office equipment, but that the owner is responsible for certain debt such as delinquent payments to vendors or severance pay to employees who will lose their jobs as a result of the transaction.
5. Purchase a company for its assets only after the broker, attorney and accountant all agree that the arrangement you are seeking is proper and the company is worth the asking price.
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