What You Should Know About Buying a Business in Massachusetts
Legal Considerations for Buying an Existing Business
Your first start as a business owner may be creating a new business of your own, or it may involve purchasing a business that already exists. There are a few things you should know from a legal perspective if you are considering a purchase.
The form of the purchase: this can be either a purchase of a corporate entity itself (i.e., an LLC or S Corporation), or a purchase of the assets of the business. Most buyers prefer an asset purchase agreement over a stock sale, for the simple reason that you do not then automatically assume the liabilities of the existing business. If you purchase the corporate entity instead, you should be prepared to do thorough due diligence to make sure you understand any liabilities or risks you are assuming.
Transition of cash, pending orders, or receivables: who gets what after the closing is a business decision between yourself and the seller, but whatever agreement you reach should be clear in the final contract to avoid disputes down the road.
Transition of employees: if there are employees you wish to have continue, your documents should be clear that their employment with the seller terminates as of the closing, and begins as new employment with you as the purchaser thereafter. This will create a clear "before" and "after" line for any employment liabilities the seller may have accrued.
Learn more here about buying or selling a business in Massachusetts.
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