900 N. Kings Highway, Cherry Hill, New Jersey 08034
856.667.4100 ·
215.563.0276 ·
Fax: 856.667.3652
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Business Tip |
If you are selling your business, be careful
In the interest of getting top dollar for their businesses, many sellers
enter into installment contracts. The buyer will pay a certain amount down and the balance will be paid in monthly
or annual installments.
If you are leasing your business location, what are you selling? Often, the sale is for inventory and the goodwill
established by you over many years of treating your customers like gold. The buyer may also be agreeing to carry
out the terms of the real estate lease.
What happens to your "investment" in this business if things go wrong? In many cases the down payment
was much less than the value of the inventory. How do you protect yourself so that the buyer doesn't use the inventory
as a means of making payments to you? This can be even a greater problem if you have moved out of the area and
do not make regular visits to the business. If sales are dropping off, the buyer may not have the money to keep
the inventory at ideal operating levels. And as the inventory drops, the sales will suffer even more.
If the business fails, you will probably lose the unpaid balance of the installment contract. You may also be liable
for the balance of the real estate lease.
If you are considering selling or buying a business, we can assist
you and your attorney. We deal with buy/sell arrangements on a regular basis. We can suggest provisions in your
agreement that will reduce the chances that you will suffer a financial loss. Please contact us; we are here to
help you.
