Buying A Business In Rhode Island

If you’re considering buying a business in Rhode Island, you’ve probably already given some thought to the potential profits you may reap from the deal. At the same time, however, you want to ensure that the purchase is a wise investment of your money and time. Buying a business is complicated and exposes the buyer (whether an individual or a company) to considerable financial risk. Having an attorney is essential to not just negotiating and properly executing the deal, but to ensuring you get the best possible value out of the transaction. This is where the experienced Rhode Island business attorneys of PALUMBO LAW are ready to help.

Our Approach To Helping Clients Purchase A Business

PALUMBO LAW brings both legal and business world experience to bear on every matter we represent. Clients, therefore, get practical advice about not just the law, but broader business considerations as well. As you decide which company you want to purchase from, we will guide you by asking such questions as:

  • Is this business in an industry you are familiar with, or would this be something new for you or your organization?
  • Why is the current owner interested in selling the business?
  • Does the business either demonstrate positive cash flow or at least the potential for it?
  • Does the business have a strong and dependable customer list?
  • Does the business have a clear plan for long-term growth?

The answers to these and other questions will guide our legal advice. Our goal is to learn as much as possible about your objectives so we can customize a strategy that works for your prospective purchase. We look to identify and address potential business and legal challenges early on so you can proceed with confidence in buying the business.

Legal Services We Offer For Buying a Business In Rhode Island

Buying a business is a process with numerous stages, requiring patience and a commitment to fully and objectively evaluate the target company. To ensure our clients are protected legally while minimizing business risks, PALUMBO LAW offers the following services (among others):

Structuring the transaction. There are a number of ways to structure the deal. Two of the most popular are the asset purchase and the share (or equity) purchase.

  • Asset Purchase: To purchase the assets of the company means to buy specific properties that the business owns. These may include physical assets such as equipment, real property, inventory, and vehicles. Intangible assets, such as intellectual property rights, may also be purchased. The buyer will assume certain liabilities by acquiring the company’s assets.
  • Stock Purchase: This is essentially the purchase of the company’s shares from its existing shareholders. Buyers often do not prefer to purchase the shares of the company due to tax and liability matters. However, every purchase is different, so let our team advise you on which structure is best.

Letter of intent (LOI). This is a non-binding agreement between you and the current owner of the business that outlines the basic terms of the prospective purchase. Every LOI is different, but most will cover the following matters at a minimum:

  • Identifying the parties to the transaction, including but not limited to any subsidiaries and affiliates being purchased
  • How the deal will be structured (e.g. asset purchase or stock purchase)
  • The purchase price of the company
  • How the purchase price will be paid (e.g. by installments or a lump sum payment)
  • How due diligence will be conducted
  • Whether there is a timeframe for completing the purchase
  • Confidentiality requirements

Due diligence. The primary purpose of due diligence is to help the buyer learn the true value of the target company. This is a complicated process that involves closely examining the company’s finances and other metrics. When conducted properly, due diligence will uncover liabilities and potential legal hazards.

Negotiating, drafting, and executing the purchase agreement. Generally, one of the two above methods of purchasing the company (asset or stock) will be used. Therefore, either an Asset Purchase Agreement (APA) or Stock Purchase Agreement (SPA) will need to be executed.

Other documents. Because buying a business can be a complex matter, there may be other necessary documents to execute. For instance, buyers typically prefer to limit the seller’s ability to compete with the business that is being sold. This is done by way of a non-competition agreement. Courts generally require non-competition agreements to be reasonable in their duration and geographic scope.

Some additional examples of documents that may be necessary are:

  • Assignment and assumption agreements
  • Contracts and contract releases
  • Deeds
  • Tax filings
  • License transfers

Closing and post-closing matters. Closing the deal includes signing the final contracts and other paperwork and exchanging money and property. Often there are post-closing obligations which can be as simple as handing over the keys to the building or as complicated as granting the new owners access to financial accounts. Regardless, we help consummate the deal and ensure all loose ends are tied.

Contact Our Rhode Island Business Law Attorney

Our firm also assists with a number of other matters that are related to buying a business and which may become necessary to handle later. For example, after the deal is completed, you may wish to renegotiate contracts with your employees. No matter what type of business you are buying, we are here to provide comprehensive legal solutions at all stages of the purchase. Give PALUMBO LAW a call today to get started.