How to Purchase an Existing Business in California

Purchasing an existing business can be exciting. However, this type of transaction can come with complications. If you want to buy a business, it is best that you consult a qualified business law attorney. An experienced attorney can walk you through the entire process. They can help you address any issues that arise. That said, below are some of the key steps in purchasing an existing business in California;

Decide the Type of Business You Want to Buy

If you are already a business owner, you most likely already know the type of business you want to purchase. On the other hand, if you are starting out, you probably are not sure about the kind of business you wish to purchase. You should take time to think about the type of business you want to buy. Consider seeking advice about the best business to invest in.

Find a Business to Purchase

After you know the type of business you want to buy, the next step is finding a business that is worth purchasing. The wider your search, the more likely you are to find an outstanding business. Before you create a list of your favorite businesses, make sure you have looked in as many places as possible. Some places you can conduct your search include online broker sites. You could also talk to local business brokers, franchisors, and local attorneys.

Business Valuation

After you have found a business to buy, the next step is determining how much the business is worth. You can value the business by yourself or hire a professional. If you do not have any experience with business valuation or are not confident in your ability to properly value the business, it is advisable that you hire a professional. A professional can ensure you do not overpay.

Consider Your Financing Options

Before you can purchase a business, you will need to work on how you will finance the transaction. Often, businesses are bought through a combination of debt and equity. A qualified business law attorney can help you determine the type and amount of financing you may be able to access.

Preliminary Negotiations

Before agreeing to buy a business, you and the seller will enter preliminary negotiations over the price, transaction structure, and any other vital issues. Often, it takes time for a buyer and seller to reach a tentative agreement. The purchase price and any other terms in the tentative agreement can be altered later if you discover any legal or financial problems during due diligence.

Due Diligence

A crucial step when purchasing a business is due diligence. Due diligence involves conducting a reasonable investigation of a company prior to an acquisition transaction. This process involves reviewing a business’s financial and legal information.

Prepare Necessary Paperwork

Purchasing a business involves a lot of paperwork, such as;

• Letter of Intent (LOI)
• Purchase agreement
• Security agreement
• Non-compete agreement

A qualified business law attorney can help you prepare the necessary paperwork.

Close the Transaction

If you and the seller agree that all required steps have been taken and there were nt any surprises during due diligence, you will move to closing the transaction. A qualified business law attorney can help you review the purchase agreement and any other documents before you close the deal.

Contact Us for Legal Help

Our skilled Santa Clara business law attorneys at SAC Attorneys LLP can help you when it comes to purchasing a business in California. Contact us today to schedule a consultation.