You don’t have to use a lawyer to buy a business. Lately our firm has seen many creative alternatives to using a lawyer to buy a business. Some of these include using a Realtor or selling on your own.
The Realtor situation, which we have seen more than a few times over the years is frustrating to watch. The Realtors inevitably use their pre-printed Commercial Real Estate forms. They then handwrite things they think are important, get initials and proudly hand the form to the client to finally take to a lawyer. The best case situation is that both the vendor and purchaser are represented by good business lawyers who agree to “start over” on the agreement and a meaningful document is created.
Realtors don’t know the ins and outs of business law the way lawyers do. They don’t know the tax implications of the transactions, they don’t understand the liabilities that can travel with a business. They are not the right advisor to sell your business.
Better still is the person who decides to sell their business on their own. Lately we sue those people and the people they sell to (who also don’t use lawyers) a lot. We generally get them on the violation of the Bulk Sales Act in Ontario. This has the effect of making the purchaser re-pay what they paid the vendor to the benefit of all creditors. Yes. You read that correctly. Feel like literally paying the purchase price twice? Go ahead, be your own lawyer.
Another “fun” situation is the family that decides to “sell” the business from one member to another for no money. The motivation there is generally to avoid creditors and often means transferring the business from one spouse who doesn’t own the family home to another who does. This makes the family home open to seizure by business creditors. On behalf of those creditors: thank-you for making it easy to recover their judgment.
Selling a business is important. Use a lawyer.