Buying a business involves more than just agreeing on a price. Legal issues in every transaction can cost you significantly if they're not handled correctly.
Are you buying assets or stock? What liabilities are you assuming? What about existing contracts, employees, intellectual property, and leases? Every one of these issues needs to be addressed in the purchase agreement.
At Kravets Law Group, we've been handling business transactions for years – including representing buyers in acquisitions ranging from small local businesses to multi-million dollar purchases. We can handle the due diligence, negotiate purchase agreements, and make sure you understand exactly what you're buying and what risks you're taking on.
Why You Need a Wilmette Business Purchase Lawyer
The seller has their own lawyer representing their interests, not yours. Without your own representation, you're at a significant disadvantage.
We review the business's financial records, contracts, and legal documents. We identify potential problems before you commit. We negotiate purchase agreement terms to protect your interests. We structure the deal properly from legal and tax perspectives. We handle all closing paperwork.
Without proper legal representation, buyers miss critical issues. Hidden liabilities. Unfavorable contract terms. Environmental problems. Employment issues. Intellectual property disputes. By the time these surface, it's too late to renegotiate.
Asset Purchase vs. Stock Purchase
One of the first decisions is structure. This affects everything: liabilities you assume, tax calculations, contract transfers, and your risks.
Asset Purchase
You're buying specific assets: equipment, inventory, customer lists, intellectual property, possibly leases and contracts. You're not buying the company itself. The seller keeps the corporate entity with its liabilities.
This is usually safer for buyers. You choose which assets you want and which liabilities you'll assume. You don't inherit unknown problems. Tax treatment is often better because you get stepped-up basis in acquired assets.
The downside is complexity. Every asset transfers individually. Contracts may need third-party consent. Licenses might not transfer. If the business's value depends on contracts or relationships that can't easily transfer, asset purchases might not work.
Stock Purchase
You're buying the company itself. All assets and all liabilities. Everything it owns and everything it owes becomes yours. Contracts stay in place. Employees remain with the same entity. Licenses don't need retransfer.
Simpler from a transfer perspective, but riskier. You inherit everything, including undisclosed problems. Pending lawsuits. Tax liabilities. Environmental issues. Warranty claims. That's why due diligence is critical in stock purchases.
Due Diligence in Business Purchases
Due diligence means investigating the business before you commit. If you skip this, you're buying blind.
Financial Due Diligence
Your accountant handles most of this, but we review legal implications. Tax returns, financial statements, receivables, payables, outstanding debts. We look for financial problems that create legal issues: unpaid taxes, creditor disputes, questionable accounting.
Legal Due Diligence
We review contracts, leases, employment agreements, intellectual property registrations, licenses, permits, litigation history, regulatory compliance, and corporate records. We're identifying problems that become yours after purchase.
Key contracts get special attention. If the business depends on major customer contracts or critical supplier agreements, we verify terms and whether they can be assigned. If a lease is essential to operations, we confirm terms and obtain landlord consent.
Intellectual property issues arise frequently. Does the business actually own its trademarks? Are there patent issues? Who owns the customer database? If employees developed technology, does the business have proper assignment agreements?
Employment matters require review. Written employment agreements? Non-compete agreements? Union contracts? Outstanding wage claims? Worker classification issues? You need to understand employment obligations you're assuming.
Litigation and regulatory issues need identification. Pending lawsuits, government investigations, regulatory violations, environmental problems. Some can be managed. Others are deal breakers.
The Purchase Agreement
The purchase agreement governs the transaction. Everything you and the seller agree to must be clearly spelled out.
Key Provisions
Purchase price and payment terms. Total price, payment method (cash, financing, earnout), and timing. If price depends on future performance, earnout provisions need to be specific and measurable.
Assets being purchased. In asset purchases, every asset gets listed: equipment, inventory, intellectual property, contracts, customer lists, goodwill.
Assumed liabilities. What debts and obligations is the buyer taking on? In asset purchases, this is negotiated. In stock purchases, buyers assume everything unless specifically excluded.
Representations and warranties. Seller statements about business condition. Financial condition, legal compliance, asset ownership, absence of undisclosed liabilities. If false, buyers have legal recourse.
Indemnification. If problems arise after closing that sellers knew about or should have disclosed, who pays? Indemnification provisions spell this out. We negotiate strong protections for buyers.
Closing conditions. What must happen before closing? Due diligence completion, financing approval, third-party consents, regulatory approvals. If conditions aren't met, either party can walk away.
Non-compete agreements. Usually sellers agree not to compete with the business for a certain period in a geographic area. Provisions need to be reasonable and enforceable under Illinois law.
Financing the Purchase
Most business purchases involve financing. The structure affects how deals get structured legally.
Seller Financing
Sellers finance part of the purchase price. You pay some amount at closing, then make payments over time. Common in small business sales. Requires a promissory note and usually a security agreement.
Bank Financing
Traditional lender financing requires extensive documentation about the business and you personally. Banks want security, usually business assets and often personal guarantees. We review loan agreements, security agreements, and guarantees.
SBA Loans
Small Business Administration loans are partially government-guaranteed, making banks more willing to lend. The process is more involved but terms are often better than conventional financing.
Closing the Transaction
Closing is when ownership transfers. Money changes hands, documents get signed, you become the owner.
Typical closing documents include purchase agreements, bills of sale, assignment and assumption agreements, deeds for real estate, new entity formation documents, financing documents, employment agreements, and non-compete agreements.
Everything must be coordinated. Money ready. Third-party consents obtained. Closing conditions satisfied. If something's missing, closing gets delayed.
Common Issues in Business Purchases
Undisclosed Liabilities
You buy the business, then discover undisclosed problems. A lawsuit. Tax liability. Environmental contamination. An important contract terminating.
Good due diligence catches most of these. That's why representations, warranties, and indemnification provisions matter. They give you legal recourse if problems surface.
Key Employee Retention
Sometimes business value is tied to specific employees. If they leave after purchase, business might not perform as expected. Employment agreements and non-compete agreements help, but aren't perfect.
Regulatory Compliance
Some businesses operate in heavily regulated industries. Restaurants, healthcare, professional services, financial services. Verify the business has all required licenses and permits, and that they can transfer or that you can obtain new ones.
Wilmette, Illinois Business Law Considerations
Business purchases are governed by the Illinois Business Corporation Act. The Illinois Uniform Commercial Code governs sales of goods and secured transactions.
Non-compete agreements must be reasonable under Illinois law to be enforceable. Restrictions on time, geography, and scope must be no broader than necessary to protect legitimate business interests.
If the business owns real estate, title issues, zoning compliance, and environmental concerns need addressing. Illinois has specific disclosure requirements for commercial real estate transactions.
Working With Kravets Law Group
We've been representing buyers in business acquisitions since 2016. We understand how these transactions work, what problems to look for, and how to structure deals to protect buyers.
We handle the entire legal process. Due diligence, purchase agreement negotiation, financing documentation, closing coordination. We explain everything in understandable terms. We identify problems before they become yours.
We offer flat fees or hourly for most business purchase work, quoted upfront based on transaction complexity. Most buyers find that proper legal representation costs less than the problems they're avoiding.
If you're considering buying a business in Wilmette or anywhere in Illinois, call us before you sign anything. We offer free consultations. A business purchase lawyer in Wilmette knows this is too important to handle without proper legal guidance.
