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Slinde Nelson

Buying an ongoing business is a safer way of business formation

On Behalf of | Nov 30, 2018 | Business Formation

Entrepreneurs in Oregon often opt to purchase an established, successful business for obvious reasons of lowering their risk going forward. The process of purchasing a going concern is not quite as easy as it may appear at first blush. Every aspect of business formation contains pitfalls that must be prevented and due diligence that must be performed.

The buyer should get a handle on how much of a capital expenditure he or she has available to invest in the purchase transaction. Additional investment funds should be available for the time right after the purchase. There will inevitably be improvements to install to make the business even more steady in its returns.

The buyer should be ready with the right questions when the shopping process begins on a prospective business. This is important because getting the foundation just right and understanding all of the potential drawbacks can help to prevent mishaps. One of the first significant issues after the preliminaries have been carried out is which kind of purchase or purchases does the entrepreneur want to engage in. It is possible to buy only the assets of the business, but this will require quite a bit of planning work thereafter. Purchasing also the ownership interests of the seller can make for a smoother transition.

It has the drawback of needing in some cases to take on some debt of the seller as pertains to some or all of the suppliers or other contractors of the business. Without the seller’s ownership interests and related matters, the buyer may have to go out and re-establish numerous vendor accounts with prior vendors or new ones altogether. In addition to the foregoing, a thorough search must be made of the seller’s debts, judgments, liens on the business, outstanding taxes and any other matters that may come back against the business for debt collection. The most efficient and safest way to proceed is to obtain the services of an experienced business formation attorney here in Oregon to guide the buyer through to a point where the business is ready to go.