how to buy an existing business ?

tnt

New member
Aug 12, 2002
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If I want to buy an existing business (which is a private ownership and not an incorporated company) like a restaurant for instance, what formalities are needed (transfer of goodwill, transfer of lease on the premises, ..etc..) ? What would be the pitfalls and things to double check ?
 

Fabio J. Guzman

DR1 Expert
Jan 1, 2002
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www.drlawyer.com
A checklist for buying a business:

a) property: owned or rented?
b) if owned by seller, see checklist for buying real estate in my website http://www.drlawyer.com/txt/articlesreal.html
c) if leased by seller, lease must be assigned (if possible), otherwise buyer must contact owner and arrange for a direct lease.
d) intellectual property: are the name(s) used for the business properly registered?
e) tax audit: is the business up to date in its payments? Income tax, ITBIS, Social Security.
f) permits: does the business hold the appropriate permits? For example, for a restaurant, permit from the Ministry of Tourism.
g) employees: will employees be liquidated? If yes, seller should hand over receipts of discharge; if no, list should be made with particulars of each employee and length of service. Buyer will assume liability for any future severance pay.
h) employees: social security paid up?
i) litigation: any outstanding litigation?
j) inventory
k) contract: non-compete provision.
l) contract: seller's obligation to be available for x amount of time after closing for information purposes.
m)contract: transfer of goodwill - description.
n) etc., including getting a good lawyer to do most of the above for you.