Purchase or Sale of Business Contract

Purchase or Sale of Business Contract San Diego Summary

Buying a business in San Diego provides an alternative opportunity to starting a new business from scratch because an existing business may provide a buyer the opportunity to enter a “turnkey” operation with an existing client base and cash flow. Selling a business in San Diego may provide the seller an exit to facilitate retirement, pursue other business opportunities, or to capture gains. It is important for both the buyer and seller of a business to have solid contracts in order to:

  • Know with certainty exactly what is being purchased or sold;
  • Secure warranties and assurances from the opposing party;
  • Effectuate the transfer of ownership as smoothly as possible; and
  • Plan for the taxation issues surrounding the purchase and sale.

Whether you are a business buyer or seller, contact San Diego Corporate Law for a consultation to discuss your business sale options.


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Michael J. Leonard helped us obtain our 501(c)(3), created our bylaws, and completed all of the necessary forms to establish a tax exempt status for our non-profit foundation. He was professional, quick, and great to work with. Mr. Leonard is also very connected in the community and has referred us to useful contacts.

Michel Sproles, Sproles Empowered Youth

FO

My experience working with San Diego Corporate Law has been nothing short of excellent. Michael Leonard is a tremendous asset, and provided us much needed assistance when forming our insurance agency. He assisted with the formation of our corporation, buy / sell agreement, company bylaws, minutes, and stock certificates. Michael is an utmost professional that I would refer to any friend or client.

Michael Fusco, Fusco & Orsini Insurance Services, Inc.

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Michael J. Leonard at San Diego Corporate Law has provided GWR valuable assistance and professional advice. As a San Diego based high tech equipment manufacturer, we appreciate that we never have to waste his or our time explaining the engineering or scientific details of our situation as his strong, hands on physics and engineering background is invaluable. We are well protected with Mike looking out for our interests.

Richard Reineman, GWR Instruments, Inc.

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In 2009 San Diego Corporate Law converted my Sole Propriety Engineering Company into a “S” Corporation. My experience was painless and Mr. Leonard has done an excellent job staying in contact and continues to be a great advisor. San Diego Corporate Law comes highly recommended.

Curtis Patterson, P.E., Patterson Engineering, Inc.

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Michael J. Leonard at San Diego Corporate Law is not your typical attorney experience. Michael puts his full attention into understanding your needs and provides the best solution to meet your goals. I highly recommend San Diego Corporate Law to any of my friends and associates.

Jeff A. Mudd, Best-Rate Repair Company, Inc.

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Working with San Diego Corporate Law made dealing with all the paper work of incorporating and setting up my business a dream! Michael is the ultimate professional and knows corporate law inside and out! San Diego Corporate Law is always available to answer questions, assist me with follow up items, and be my go-to and support team.

Elloise Bennett, AP Test Service, LLC

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Mr. Leonard is competent, dependable, and gets the work done on time and within budget. He is very responsible to his customers. We would recommend him to anyone that requires a true professional.

Lidija Skolnija, anaZana, Inc.

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I was recommended to Michael to help me set up a new corporation I was starting. The advice he gave me was great, and I eventually hired his services to create the agreements and contracts between myself and my business partner. Throughout the process he guided me and asked very detailed questions. I felt that he had my back and my best interest at heart. Looking back now, the contracts he wrote have saved me close to $40,000 in money that I would have otherwise had to pay. Thank you Michael. Everyone should follow your standards.

Jason Delfos, Marketing and Advertising Design Group, LLC

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We hired San Diego Corporate Law to help us establish our business in San Diego. In the initial stages of setting up our business and transitioning to California, we were frequently out of town. During this time, Michael answered questions promptly and thoroughly by phone and email. He went above and beyond to keep us on deadline for our aggressive schedule. I would not hesitate to recommend San Diego Corporate Law to another business owner.

Alicia Sorber-Gallegos, Two Men and a Truck

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Having no prior experience with business law, I approached Michael to help me set up an LLC for my new company and help me review my legal disclaimers. Michael was very straightforward, honest and helpful. He took the time to explain every detail and answer all of my questions. His work was very diligent and completed exactly by the deadline promised. Michael and San Diego Corporate Law hold my highest recommendation!

Anton Ivanov, Dreams Cash True

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Michael J. Leonard helped me configure my business entities into a solid investment vehicle. He is very professional, knowledgeable, easy to reach and timely. San Diego Corporate Law produced a unique and informative Private Placement Memorandum (PPM) for my business for less than half the cost other law firms were charging. I expect to use the PPM and San Diego Corporate Law for many years. I recommend Michael because of his efficient, hands on, practical approach to legal work in a time of dramatic changes with securities laws (JOBS Act).

John Copyak, Clean USA Power, Inc.

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San Diego Corporate Law helped me set up MGIV Inc and get established as an S-corp in 2013. I was a one man show and didn’t have a substantial amount of money to spend to get started. I was in the process of filing for a LLC through Legalzoom.com when something didn’t feel right. I picked up the phone and asked Michael if he was available to help. This was my first business so I knew nothing about filing for a corporation or legally establishing a business. Using his knowledge and expertise he coached me toward filing for an S-corp instead of an LLC. It saved the corporation $800 in 2013 and positioned it for success based on the MGIV Communication Consulting model. I find comfort knowing that my business is in good hands. Michael is a great resource and very personable so working with him is convenient and affordable! I recommend San Diego Corporate Law to anyone needing legal assistance with their business!

Michael Gordon IV, MGIV, Inc.

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When I needed to move my business from an office suite to a brick and mortar location, San Diego Corporate Law was instrumental in ensuring that the lease provisions were in my best interests. The specialized skills that Michael and his team possess, the fair and transparent fee structure, and their professional yet low pressure consultation process are the reasons why I will retain their services in the future.

Scott Weathers, Alpha Graphics La Jolla

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Michael J. Leonard at San Diego Corporate Law not only helped us establish our small business in San Diego, but he helped us to solidify our partnership to avoid any gray areas as we are a family-run business. Michael was easy to work with, knowledgeable, responsive, and professional, and we will continue to use him as our company lawyer moving forward.

Karen Posner, Camp Run-A-Mutt Sorrento Valley

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I have nothing but compliments to say about San Diego Corporate Law. Michael and his team have always delivered not only an extremely high level of service, but also have been so patient through the whole process of setting up our LLC. Whenever I have questions or need their service, they are very easy to communicate with and very reasonably priced. I will not only use them for any legal advice that I may need in the future, but also refer all the people that may also need their services.

Andrey Kamogari, Kamo Housing

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Michael assisted us with the process of incorporating our non-profit organization. Michael was responsive to all of our questions, and sensitive to the expedited timelines that we encountered. Among the best aspects we experienced in working with Michael was his appreciation for our specific goals and his candid and honest guidance to accomplish those objectives. I would highly recommend Michael Leonard and San Diego Corporate Law.

Esther Hemmen, Mending Matters

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San Diego Corporate Law has been a crucial partner for Little Black Diamond. Whether it’s routine incorporation paperwork or complex employment law, Michael is always very responsive and available to help handle our legal issues. He takes the time to understand your business and the unique issues that surround it in order to provide accurate and timely advice that considers the best interest of your business. San Diego Corporate Law is a true partner for any business.

Adam Rosenberg, Little Black Diamond, LLC

Purchase or Sale of Business Contract San Diego Details

Structuring the Purchase or Sale of a Business

The purchase and sale of an existing business may be accomplished in one of three ways:

  • The sale of business assets;
  • The sale of stock, membership, or other ownership interests; or
  • Statutory merger or consolidation.

Each method is effectuated in a different manner, and the benefits and detriments of each type of acquisition is dependent upon the statutes of the states governing the businesses and transaction and the tax considerations of the transaction.

Sale of Business Assets

The benefit to purchasing the assets of a business rather than the business as a whole lies in the unknown obligations of the target business. While all the obligations of a business should be found in the balance sheet, sometimes the obligation is unknown to the seller or the costs associated with an obligation are as yet undetermined.

A prime example of an unknown obligation is a lawsuit against the target company. If a future litigant has not contacted the target business and made a claim for damages, the target company may not realize the legal claim exists. Litigation against a target company might also be pending at the time of a sale, and the seller may not know exactly how large a judgment against the target business might be.

In an asset sale, only the obligations appearing in the balance sheet are assumed by the buyer and any obligations not expressly assumed by the buyer remain the obligation of the seller.

Sale of Ownership Interests

Purchasing all the shares of stock or membership interest in a corporation or LLC is an easier way to acquire a business compare to an asset sale. When all the stock or membership interests are purchased, all the assets of the business are transferred to the new owner.

Another advantage to purchasing ownership interests lies in the burden an asset sale places on the transaction under “bulk sale” laws. Bulk sale laws require notice of an asset purchase be furnished to the creditors of the seller and allow creditors not receiving notification to settle debts against the purchased assets. However, when the ownership interests are purchased, and thus the assets purchased indirectly, bulk sale laws do not apply.

Statutory Mergers or Consolidations

A statutory merger occurs when a purchasing corporation or LLC purchases a target corporation or LLC, liquidates the assets of the target, and continues operating as the same purchasing corporation. Consolidation occurs when a purchasing corporation or LLC purchases a target corporation and emerges as a new corporation or LLC different from either the purchasing or target corporations or LLCs.

Tax Considerations

Apart from the non-tax considerations above, state and local governments impose taxes upon the transfer and sale of assets, including transactions in which businesses are purchased and sold. Sales taxes, taxes on real estate transfers, and taxes on motor vehicle registrations should be considered when choosing a method to purchase or sell a business and may be avoided with some methods of ownership transfer.


Need help with your contracts?

Send us an Email or call us at 858.483.9200