Always remember the “Golden Rule.” That is – the person with the gold makes the rules. Unfortunately, when it comes to landlords, this couldn’t be more true. Landlords can be a major deal killer when selling your business, and you must often acquiesce to their demands if you want to sell your business. Bite your tongue and be as cooperative as possible. If your landlord is scaring buyers off, then you have the following options: Act as a liaison between the buyer and the landlord to minimize communication between the two parties. Meet with the landlord to see if they...

Note: The information in this article applies only if the buyer of your business is likely to be an individual or small competitor. It does not apply if the likely buyer is a mid- to large-sized competitor, another company, or a financial buyer, such as a private equity group. These buyers often pay cash or put down up to 90% cash at [glossary-ignore]closing[/glossary-ignore]. Your business must get pre-qualified for financing because your business must produce enough cash flow to cover the monthly loan payments. Loans are pre-approved based on the cash flow available to support the debt service. The cash...

You will not be held personally responsible for a corporation’s debts. A corporation is considered a separate legal entity from its shareholders. Hence, the debts of the corporation cannot be charged to the corporation’s individual shareholders. However, your investment in the corporation -- the cash or property that you transfer to the corporation as payment for the 49% share -- may be used to pay the debt. Before you invest in any corporation, it’s important to understand the specifics of the corporation’s debt and its overall financial and legal condition. The corporation’s board has the power to decide how or...

Ideally, the check should be paid to the LLC, since the entity was the legal seller of the business. On the other hand, if you dissolve the LLC, you would be the successor in the interest of the LLC's rights, including its right to the monthly payments (assuming you are the LLC's sole member). Typically, it would be prudent to maintain the LLC until the buyer has completed payment. In this case, the buyer could pay you directly. However, the advantage of maintaining the LLC is that it acts as an extra layer of protection in case some liability arises...

Retaining a minority interest in a business involves a number of key decisions that must be made regarding how the business will operate after the closing. What follows here are a few factors you should consider before deciding to retain a minority position. What liability does a minority partner have? What happens if the entity the minority partner holds an interest in is sued? Assuming the business is in corporate form, the minority shareholder is liable only to the extent of their shareholding. However, as an exception, the minority shareholder could be made liable to whatever extent it could be...

This arrangement is quite common in the middle market, with businesses priced at over $5 million. However, it is rare for Main Street businesses that are priced at less than $5 million. Although this idea could work, you must be on the lookout for several pitfalls: A 10% to 20% ownership stake is difficult to sell to anyone other than the current business owner. We recommend considering this option only if you have a buy-sell agreement in place that would force the current owner to buy you out if you ever wish. Without a buy-sell agreement, you will be left...

Even a document labeled “letter of intent” (LOI) may be enforced by a court of law as a binding, enforceable agreement if the court determines that the parties intended the document in question to be a binding agreement at the time it is signed. Are You Kidding Me? No. And when a business owner is threatened with the potential loss of a company as a result of an adverse court ruling, they do not view the matter as a joke. First and foremost, business owners thinking about selling a business -- and prospective buyers interested in purchasing a business --...