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Home Business Ideas
All business books written by sharks of entrepreneurial activity are based, in fact, on one rule: "Do only what you like and be honest with yourself." Indeed, the whole secret…

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Buying and selling a business

Create a business from scratch or buy a ready-made business. Both methods of organizing entrepreneurial activity have their pros and cons, “pitfalls”. However, if, when starting a business from scratch, company registration procedures are standard and known in advance, and further development depends on the efforts made, then in the case of buying a ready-made business, everything is far from transparent.

Pros and cons
What may appeal to the purchase of a ready-made business: it has passed the state registration procedure, there are settlement accounts, the company has a certain history and name, a certain staff, an established customer base and business tactics.The purchase of the legal entity itself will not entail a change in the structure of existing relations with counterparties and government bodies: renegotiation of contracts, renewal of licenses, patents, means of individualization of a legal entity will not be required.

At the same time, there are a number of points that can reduce the attractiveness of entering a ready-made business. The main one is the lack of complete and reliable information about the history of this company: for example, about transactions that could have been completed before the company was purchased and which could be declared invalid for various reasons, including violations of the law when they were made, about various kinds of company debts, about other problems that have arisen or may arise. In addition, questions from the tax authorities regarding transactions or procedures for paying taxes and fees in the period preceding the purchase of a given company or a share in it should never be excluded.

In this case, the main way to dispel your doubts and concerns is to try to get the necessary information as much as possible.

It will not be superfluous to check the file cabinets of courts of general jurisdiction at the location of the company or the main asset that makes up the company’s business.

It will be useful to monitor disputes in the file cabinet of arbitration cases on the website of the arbitration courts of the Russian Federation.

Another source of information may be requests to state authorities, lawyer’s requests on the basis of Art. 6.1., The Federal Law “On Advocacy and the Bar in the Russian Federation” dated May 31, 2002 N 63-ФЗ, including those sent to the management bodies of the company. If, however, a dispute arose during the negotiations on the sale of business between the contracting parties that could be resolved only in court, the source of information can be case materials and requests that the court has the right to send at the request of the parties when considering the case.

Requests may be related to the availability of permits, admissions, licenses for certain types of activities or notifications timely submitted by the company to established bodies / institutions; on the ownership of the organization in relation to a property; about the presence of company debt, etc.

However, it should be noted that most of such information is not provided to unauthorized persons by state bodies and institutions, therefore, the analysis of documents and information provided by the company itself will be most informative. But in this case doubts may arise in its reliability and objectivity.

Even the most thorough examination of a business asset before its acquisition does not always guarantee future owners that the acquisition will be hassle-free. When collecting and analyzing information, not all circumstances may be taken into account. In addition, the owner of the property or share may be dishonest.

In order to protect themselves from such situations, the acquirer of the asset can take a number of preventive measures.

Features of payment and risks when buying a business
It is not necessary to pay the value of the asset at the same time. It is advisable to divide the amount of payment into several parts – depending on the sequence of actions. The main amount can be paid after completion of registration procedures, and the remaining amount – after the transfer of documents related to the company, its assets. It is recommended that the contract stipulate the right to claim the amount of losses incurred by the buyer in connection with the presentation by third parties of claims against the buyer arising in connection with the acquired asset.

It will not be excessive to include in the contract of sale of a business asset guarantees and assurances of the seller: about the absence of third party claims, restrictions and encumbrances on the asset; on the reliability of the accounting and tax reporting of the company, the absence of debts at the time of the transaction, etc. As a sanction for dishonest assurances, you can provide for the right to a unilateral cancellation of the buyer from the contract with compensation for losses incurred, or a fine forfeit.

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