Buying a business is not for the faint of heart because it requires a great deal diligence. In a business purchase it is possible to lose the entire investment. The purchaser may be liable for debts of the previous owner including unpaid taxes. Here are some business purchase strategies:
Imminent or pending litigation might not be made known by the vendor. This happened to me and is one of the reasons why I went bankrupt. Disclosure is required by the seller in most business purchases. If the seller does not fully disclose the pending litigation, you may be held responsible for the liability. It may be possible to sue the seller, in the event that the seller defaults on this obligation. An ounce of prevention can be worth a pound of cure. Research the business thoroughly before committing to a purchase.
Hire the Right Professionals
Due diligence is the purchaser’s burden. The purchaser must be in the driver’s seat, even with the best accountants, the best consulting firms, and the best attorneys. Professionals who take time to educate you and explain things are the ones to choose.
Business liability insurance can protect against lawsuits for property damages, personal injury, etc.
Your Personal Liability
Avoiding personal guarantees in purchasing or owning a business is difficult. For a business, creditors will generally request a corporate guarantee as well as personal guarantee. Try to avoid this.