liens | Blue Maven Law

by: Brian RogersMay 6, 2014January 13, 2020 Due Diligence

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.

by: Brian RogersApril 8, 2014April 8, 2014 Asset Sales

“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.

by: Brian RogersApril 1, 2014April 1, 2014 Due Diligence

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.

by: Brian RogersFebruary 17, 2014April 3, 2019 Asset Sales

In How to Title a Vehicle in Missouri, I provide step-by-step instructions on how to transfer title to a vehicle, obtain a new title, and register the vehicle. In today’s post, I discuss recording a lien on a vehicle.

When you purchase a business via an asset sale, you have to transfer the assets you’re purchasing out of the seller’s company and into your company. Most assets can be transferred by having the seller sign a general bill of sale. But some assets, such as cars and trucks used in the business, have special rules.

Summary of SBA 7(a) Loan Rules

SBA loans can be a great way to finance a small business acquisition. Like most government programs, SBA loan programs have plenty of rules. In this post, I summarize the highlights of the rules for

Certificate of Tax Clearance vs. Certificate of No Tax Due

In Tax Clearance Basics I discuss the importance of obtaining a tax clearance certificate when buying a business. I also provide instructions on how to obtain such a certificate in Missouri. In short,

Stock Basics

Business owners and potential purchasers of businesses tend to have a number of questions about corporate stock and how it works. This post is a basic 101 tutorial, which answers some common questions