Buying and Selling a Business pot

[...]... guarantee that the trademark doesn’t infringe on someone else’s trademark, or that the patent is valid in representing an advance in the state of the art In either case, a competitor could challenge the validity of the trademark or patent Most lawyers (me included) ■ 27 ■ ■ Buying and Selling a Business ■ are not adept at patent matters If the existence of a patent (or a trademark) is a key to the business, ... adequate amount of you’ve decided a business engaged in some form of construction is for you You’ve always been a pretty good amateur carpenter and can speak the language of the building business You also feel you have the managerial skill to handle a business that has a fair number of employees and outside salespeople You’ve also found a business broker you have confidence in, and with that broker’s... bit about the legal, financial, and practical aspects of buying a business After you’ve read it, test your broker If he or she doesn’t seem to know as much as you know about all the ins and outs of buying a business, find another broker ■ 9 ■ Chapter 2 Evaluating the Target (I): Why Is the Seller Selling? L et’sdoing anthat the following eventssoul-searching,occurred assume have already After adequate... you may be able to turn the place around fairly quickly (In some cases this requires little more than a new coat of paint and a broom.) What you have to be careful about, however, are the results of ineptitude that can’t be easily corrected The seller’s lack of savvy may have irreparably damaged the business s relations with suppliers and customers We’ll do an in-depth analysis of business operations... premises lease and for the same reasons The terms of a loan may effectively prevent a transfer of the assets If this is so and the bank refuses to waive its rights, a sale may be impossible Why would a lender try to prevent anyone from buying the asset and assuming the debt? Because the lender parted with its money only after ■ 23 ■ ■ Buying and Selling a Business ■ it checked and was satisfied with... however, greater financial and money management skills are required to run a manufacturing business than a retail sales outlet Conversely, manufacturing businesses often don’t deal with the general public A manufacturing or distributing business often will entail a set of selling skills different from those needed for a retail business Some people are good at taking potential customers to lunch and giving... sharpened your thoughts about what you’re looking for and what you can handle, psychologically and financially Fortunately, your broker’s inventory contains a number of businesses that appear to fit the profile You’ve investigated these, but all save one turn out to be blind alleys All but one either cost far too much or are too small Some are losing money and don’t appear to be good turnaround candidates... over a proper amount of rent Most leases also have a blank where the tenant and the landlord fill in what the premises will be used for and prohibit the use of the premises for any other purpose For example, the lease may state: “The premises shall be used for the purpose of selling shoes and other footwear apparel at retail and for no other purpose.” Adding a line of jogging shorts and shirts may constitute... assumption that one of the factors contributing to its success is a stable and motivated workforce Your goal should be a smooth transition, with the valuable employees staying with you and staying motivated Start out by having the seller draw an organizational chart for you It may be the first time the seller actually has had to think about who gives orders to whom and who takes them; the process may be an education... claims pending against the seller on the lease You and your attorney should read the lease carefully Houston may tell you his rent is $5,000 a month When you read the lease, you find, sure enough, the rent is $5,000 a month But keep reading! You may find that the lease allows for an increase in rent The increase may be a specified dollar amount or based on a percentage, ■ 21 ■ ■ Buying and Selling a . carpenter and can speak the language of the building business. You also feel you have the managerial skill to handle a business that has a fair num- ber of employees and outside salespeople. You’ve also. investigating, and negotiat- ing the purchase of a business. Believe it or not, investigating the financial statements and operations of a complete stranger can be easier than digging deep down and analyzing. collaborative effort of the attorneys and staff of Bol- dra, Klueger & Stein, LLP, Woodland Hills, California. I wish to thank my partners, Patricia Boldra and Jacob Stein, for their valuable input.