Donna Genie explains considerations when a business owner purchases an existing, family-owned business. She notes parties often already negotiate sales price but must complete a due-diligence checklist before transition. The buyer commonly purchases business assets and forms a new entity, requiring re-establishing accounts and separate entity operation to track property and provide legal protection (e.g., insulating liability tied to the selling entity). Advice is framed around being about a month out from transition and preparing operational and legal arrangements.
Chapters
Hi there. I'm working with a business owner who is purchasing an existing business from a family member and we are assisting this business owner in purchasing from their family. Now, they've already agreed on a sales price, which is a big enough issue there that many people struggle with. But as we approach that transition time, there are a lot of things to check off the list. As a new owner of that family business, you are most likely purchasing the assets of the business and you're going to start up your own entity for that process. If you in starting your own entity, you'll need to re establish all of the accounts. And the owner that I'm working with today, we are looking at some due diligence. They're still about a month out from their transition date, so we want to make sure that we have all that information set up. A really important piece there is discussing the entity strategy and how they will operate that business. They'll operate both of those in separate entities so that they can track the business property separately. It's a good idea to do that for legal protection for one reason and that legally, if someone were to su business based on a faulty product or something like that.
