What to consider when buying a company

| Jun 4, 2021 | Business Law

Purchasing a Pennsylvania business may allow you to minimize your risk of failing as an entrepreneur. However, there are many items that you’ll need to consider before the acquisition becomes official. For instance, it’s a good idea to determine if the company can be profitable in the long-term or if it is involved in any pending litigation. It may be in your best interest to have an attorney review the terms of any proposed purchase agreement before you sign it.

What sets the business apart from the competition?

A company cannot continue to be profitable unless it possesses something that the competition doesn’t. For example, if the business that you want to buy has a patent or trademark on the product that it sells, a competitor may have a harder time stealing its market share. At a minimum, another company would need to seek permission to use the intellectual property that you would gain ownership of when buying an existing company.

How strong is the brand’s reputation?

The current strength of an acquisition target’s brand will have an impact on your marketing strategy as its new owner. Furthermore, it may also play a role in how much the company is worth.

How would the sale be structured?

There are many different ways that a purchase can be structured to best meet the needs of the parties involved in the transaction. If the current owner has a certain skill that you need to learn, he or she may stay around until you’re ready to lead the company yourself. If you lack the capital to pay for the firm in full on closing day, it may be possible to pay for the business in installments. A business law attorney might be able to help you determine if those options are worth considering.

Generally speaking, it’s in your best interest to have an attorney assist you during the process of acquiring a business. He or she may be able to make sure that you understand the terms of a proposed deal before agreeing to them.

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