Among the simplest ways to enter into the restaurant or hospitality industry is to purchase an already established business. This comes with the advantages of gaining a physical location and the assets needed to begin operations immediately. It can also allow you to receive the goodwill and place in the community that the sellers already occupy.
Even so, it is best to approach these sales with appropriate caution. This sale is likely to approach a value of at least hundreds of thousands, if not millions of dollars. Obtaining favorable purchase terms can ensure that the sale moves forward at a reasonable price as well as secure all necessary assets to your new ownership. Consulting with a New Jersey business purchase lawyer could be the first step towards your new restaurant or hospitality venture.
Purchasing a business may seem like a simple matter of locating a seller willing to part with their business and agreeing upon a price. However, the legal aspect of this sale can be much more complex. It is first necessary to identify the current owner’s business structure. If they are a sole owner, the sale will generally involve no more than the direct transfer of control. More complex ownership structures that split shares across multiple parties or that involve a partnership may require the buying out of each share of stock or partnership share.
It is also helpful to investigate the current owner’s financial situation with vendors and banks. Purchasing a business means that the new owners will assume responsibility for all current contracts. This could include a mortgage on real estate, payments on fixtures such as kitchen equipment, and contractual obligations with vendors. A New Jersey business purchase attorney could take the lead on preparing a sale, developing a sale agreement that leaves a buyer as the sole controller of the business.
Ensuring that the purchase of a restaurant, bar, or hotel meets the legal requirements is just one way in which an attorney could provide services. Lawyers also help to draft sale agreements that result in favorable terms for buyers. Every purchase agreement is open for negotiation, and a New Jersey business purchase lawyer assists clients to recognize where there is room for conciliation and where they must stand firm regarding the final contract.
The most obvious example is the question of price. This includes whether the transfer of funds will occur in one lump sum or if payments over time will be appropriate. It may also involve whether a seller will pay off all outstanding debts prior to the transfer of ownership. A number of other negotiable terms may be present in a purchase/sale agreement, including:
A New Jersey business sale attorney fights for favorable terms for clients. They can also help to pursue legal action in the event of a breach of contract. New Jersey Revised Statute § 2A:14-1 sets a statute of limitations of six years for many breaches, although this may differ based upon the nature of a contract.
Purchasing an established business raises many essential questions under the law. Among these is the right of the current owner to sell, the impact that this will have on existing contracts, and forming the terms of a purchase/sale agreement. Seeking out legal counsel concerning these sales could help to protect both your legal rights and your finances.
To learn more about how a dedicated member of our legal team could help you, reach out to a New Jersey business purchase lawyer at our office today. We are ready to investigate the current legal status of a business, understand your goals for the purchase, and draft contracts that lead to a more favorable outcome.