How do I Buy a Business's Shares & Assets?
When it comes to purchasing a business, the question usually revolves around whether to buy the assets or the shares of the business. If you are buying an unincorporated business, you will purchase the business assets; on the other hand, if you are buying a corporation, you have the option to buy only the assets or to buy the shares to assume ownership. Buying shares means you end up with both liabilities and assets of the company. Whichever the case, prudence and investigation are keys to determine whether the business offers enough value to purchase its assets or shares.
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Instructions
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Look over the company's most recent balance sheet by obtaining a copy of its annual report for the investor's relations department of it the company is unincorporated; seek the report from the company owner. You want to gain an idea of how profitable the company is and what it owns as far as assets. If it is a corporation, you can also determine the number of shares outstanding, to know how many shares are currently held by investors. You may want to employ the services of a CPA firm at this stage to make sure the information is accurate and interpreted correctly.
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Negotiate a price either for all assets, part of the company's assets or for shares, depending on the determination you reach regarding the value of the company. Just as important as price, negotiate the terms of the sale. Both parties will need to agree either on all assets being transferred or on the number of shares to concede ownership and at what price. During the negotiation stages, you may want to involve an attorney and your CPA to ensure your interests are preserved.
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Set a final date to complete the transaction through a purchase agreement. Have your attorney review all final purchase agreements as well as the bill of sale. Make sure you are purchasing exactly what you negotiated, whether assets or shares. Once you both are ready to move forward, consummate the deal on the date set forth by signing all agreements.
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Tips & Warnings
When you buy the majority shares in a corporation, you assume ownership. This means you will have taken on the company's assets, liabilities, legal concerns and taxation. You should investigate a company's background thoroughly before moving forward with such a purchase.
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