Brian's Blog

Why You Should Do Lien Searches Before You Buy a Business

Lien Search

When you’re buying a business, you should make sure that the business’s assets aren’t encumbered by liens. As I mentioned in Don’t Let the Seller’s Liens and Taxes Stalk You, even if you structure a business acquisition as an asset sale, the seller’s liens are your problem.

A lien is a legal right or interest that a creditor has in another’s property. If you’re buying a business whose assets are encumbered by a lien, someone else will have an interest in your property. If that someone is the seller’s creditor, that’s bad news for you if the lien is still intact after closing.

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LinkedIn — Resource of the Week

LinkedIn

LinkedIn is the social media platform for professionals. A lot of people use the service to connect with business contacts, keep in touch, and research prospects. But this post is about utilizing LinkedIn’s social media features, especially the news feed.

As with social media platforms such as Facebook, LinkedIn (for the most part) requires a reciprocal connection between users. Unlike Twitter, where people can follow you without your permission, LinkedIn requires you to accept an invitation to connect before a potential connection can see your LinkedIn activity.

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Your LLC Won’t Protect You From Yourself

LLC liability protection

Everyone knows that business owners should form a limited liability company or a corporation. But just having a company isn’t enough to protect you from your business’s liabilities.

You’re responsible for your own actions when you harm someone else, even when you’re working for your corporation or LLC. So if you harm someone, they can sue you as an individual and go after your personal assets. Your business might still be liable under a concept known as vicarious liability, but you’ll be liable, also.

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Docracy — Resource of the Week

Docracy

Do you need access to form contracts? Have you checked out Docracy?

What are you waiting for?

Docracy is an online resource for crowd-sourced contract templates. I’ve used documents that I found on Docracy in my own law practice, and I’ve also contributed to the cause by uploading a couple of my own contracts for others to use. The quality of documents that have been uploaded to Docracy ranges from good to not so great, but I’ve found it to be a great resource.

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Why You Should Review Your Important Contracts Before You Sell Your Business

caution

A company’s key contracts represent a valuable business asset. Thus, it’s crucial that the contracts remain in force as a business changes hands from the seller to the buyer when the business is sold.

As I’ve written elsewhere on this blog, the sale of a small business is usually structured as either an equity sale or an asset sale. In an equity sale, the buyer purchases the equity from the owner(s) of the company being sold (commonly referred to as the target company) — stock in the case of a corporation and membership interests in the case of a limited liability company. The business is transferred to the new owners, corporate or limited liability company entity and all, and the target becomes a wholly-owned subsidiary of the buyer. There is no change in the status of the target entity itself, and its contracts, assets, and liabilities remain with the entity.

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Hootsuite — Resource of the Week

Hootsuite home page

Do you run your business’s social media operation by yourself? So do I. Folks like us need quality tools to help us out.

Hootsuite is a social media management application. It can serve as your control panel for consuming content from — and interacting with — a number of different social media applications such as Twitter and LinkedIn (my two favorites). Through Hootsuite you can access all your social media accounts from one place to save you from having to log into each one separately.

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Don’t Let the Seller’s Liens and Taxes Stalk You

stalking liabilities

“Leave the gun. Take the cannoli.” Fictional mobster Peter Clemenza delivers this famous line in The Godfather after a drive into the country with the godfather’s driver Pauli. The driver betrayed his boss and Clemenza has just meted out justice.

Take the good stuff. Leave the bad stuff. That’s the main idea behind buying a business via an asset purchase. Here are a few pointers so you won’t find yourself pursued by the Seller’s unpaid taxes and liens.

What’s an asset purchase?

There are innumerable ways to structure the purchase of a business, but most deals are either asset purchases or equity purchases. In an equity purchase, the buyer purchases the equity of a company (often referred to as the “target”) from its equity holders — stock in the case of a corporation and membership interests in the case of a limited liability company. The buyer ends up with the entire company, along with all of its assets and all of its liabilities. In a deal structured as an asset purchase, on the other hand, the buyer purchases the company’s assets but leaves the corporate entity behind, along with some or all of the company’s liabilities.

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Instapaper — Resource of the Week

Instapaper

There’s an incredible amount of interesting and entertaining information on the Internet. There’s so much, in fact, that it’s a good idea to develop a usable workflow so you don’t drown in a sea of information.

In past Resource posts I’ve talked about using tools like Twitter and Feedly to set up a system for automatically bringing information from the web to you. Today’s post is about Instapaper, a tool that helps you easily save links to content so you can read the articles when and where it’s convenient for you.

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Don’t Buy a Business Without Looking Under the Hood

looking under the hood

Before you buy a business be sure you’ve done your due diligence. Even in the days of Carfax, you wouldn’t buy a used car without looking under the hood to make sure the car’s in good condition. You’d probably also take it to a mechanic to have it examined by an expert. If you’d do this for a car purchase, why would you making a life-changing investment without making sure the business you’re buying is in good condition?

If you’re smart, you won’t.

You’ve probably heard the phrase caveat emptor — “buyer beware.” It means that it’s the buyer’s responsibility — not the seller’s — to ferret out issues that could affect whether the buyer wants to go through with the deal. The onus is on the buyer to ask questions and challenge assumptions.

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Feedly — Resource of the Week

RSS feed aggregator

The best thing about web 2.0 — that is, social media, blogs, and the rest of the interactive Internet — is that you can have interesting information come to you. Using the right tools, you can set things up so great content comes to you while you’re doing something else. Then you can interact with it and with the content’s creators on your own schedule.

My last two Resource of the Week posts were about Twitter, as a tool for listening as well as a tool for connecting. Today’s post talks about RSS feeds and specifically Feedly, one of the most popular tools for harnessing the power of RSS.

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