Buying or Selling A Business in California

Get the Best Deal: Legal Expertise for Business Sales in California

The smart way to evaluate opportunities, understand critical information, and close the deal you want

The purchase or sale of any business is a complicated process for which experienced legal counsel is essential. Whether we represent the seller or purchaser, we aim to educate the business owner in the phases required to effectuate a successful deal and, where possible, negotiate a price that is most favorable for our client.

The Two Primary Methods of Transferring Ownership

  1. Sale of the business assets. 
  2. Transfer of ownership of the entity itself (an equity transfer).

Asset Sale/Purchase

In this form of business sale, the buyer purchases specific company assets and may assume certain liabilities. Numerous issues can arise in such transactions, such as inventory, accounts receivable and payable, contract term length, condition of assets, and lease of premises that must be addressed.

Equity Sale/Purchase

In an equity sale of a business, the purchaser buys shares from the shareholders (corporation) or the membership interests of the members (LLC). Purchasers generally prefer to avoid an equity sale to minimize both tax and legal liability issues. In a stock or equity sale, the purchaser inherits all the liabilities of the business.

Non-competition Provisions

Purchasers will often require a provision in the Agreement that prohibits the sellers from competing with the business after the sale. The parties negotiate the duration and geographic limitation of such provisions. Courts require such provisions to be reasonable to not impinge on commerce and trade.

Due Diligence

The purchaser uses the process of due diligence in the investigation or exercise of care that a reasonable person would generally be expected to take before entering into an agreement. The purchaser gains access to the financial and legal history of the business, its assets and liabilities, and any contracts or agreements it has in place. The due diligence process is essential in allowing the prospective purchaser to identify potential issues or risks that could impact the transaction.

Purchase Agreement

This document outlines the transaction terms, including the purchase price, payment terms, and any contingencies or conditions that must be met before the sale is completed.

Bill of Sale

A business bill of sale executes the sale and transfer of a business. It details the terms of the transaction at the time of sale and officially establishes the new ownership of the business

Other Considerations 

  • Advise on practical business and financing issues related to the transaction.
  • Review and negotiate the commercial lease as to any assignment.  
  • Advise on employment matters, such as the continued employment of key employees. 
  • Negotiate the terms and structure of earn-outs as part of compensation for sellers.
  • Advise on the laws of local jurisdictions affecting the business and any applicable licenses and permits required for its legal operation.
  • We work with your CPA and financial advisor to secure the most desirable tax benefits.