Business Law – What Is Involved In The Buying Or Selling Of A Business?
- The most important thing about buying or selling a business from a buyer standpoint is that you need to be sure of what the value of that business is.
- You should be entitled to look at the books and records of the business owner, to see what kind of revenue they are generating and what their expenses are, so you can determine what the profit margin is, and once you do that, then you’ll be able to come to an idea of what the value of the business is.
- Another important factor in determining the value of a business is the type of lease the seller has as this is the most important thing. Without a good lease, your business value is very much different.
- When I represent a buyer, I go over that lease with a fine-tooth comb to make sure that there are no hidden provisions or remedies and rights that the landlord has that could determine the longevity of that business, or there might be some hidden expenses that the seller might not have made you aware of.
- The most important thing is the length of the lease, because no one wants to invest a lot of money in something that they can’t really plan on being there for a long time. If you get a long-term lease, at least it allows you the luxury of knowing that after a couple of years, you can sell the business to someone else, knowing that that next person’s going to have five or seven years to go on the term of the lease.
- Generally, five years is a minimum amount of time you’d want on a lease to buy a business.
This short informational legal video was provided by Arnold Drucker, an experienced Jackson Heights Business Lawyer.