Hello, last spring my husbands employer offered to sell us his lawn care business, all he required was a $10,000 down payment and then monthly payments till the business is paid for, which to be honest is a little more than what I paid for my house, well at the end of November we will have the $10,000 down payment and be ready to sign a contract to take over the business, I however am noticing some inconsitancies and questions are arising, first of all, he keeps buying new equipment, and saying it will be added to the amount of the loan, can he do that? second he seems to think that after we sign a contract and he has his down payment, that he is still the owner and has access to the bank accounts, and the final say in what and how we run the company, if I am not mistaken, if we sign a contract and give him the down payment, that makes us the owners right? and he has no say at all, and if we default on the loan(god forbid) he can take us to court to get it, its like buying a house, you have the down payment, you have a mortgage as long as you make the payment every month you can do what you want with the house, the bank cant say what color to paint the walls or that you can't add on or make improvements, I am just a little confused, and would really like to know if and when we sign a contract is he still the owner and does he still have the final say?
You need to have an attorney create the sales agreement/contract. Don't allow the owner to create his own contract or you could be in big trouble. As soon as you sign the contract, you need to register the business in your names and get the owner's name off it. You also need to change the bank accounts, either to another bank or close the existing accounts and open new ones with a different number.
Before you go forward with a purchase, you need to have an accountant review financial statements going back at least three years. If the owner refuses to produce them, that is a huge red flag that something may be going on that you don't want to be involved with. Be certain that he has paid taxes on all income, is up to date on employee withholding payments and other legal requirements.
It sounds as if the owner may be thinking of the sale as a lease-option agreement, not an outright sale. You will want to be certain that everything is very clear and spelled out in writing by your attorney.
BizResearcher | Window Shopper | 9/27/2011 - 1:11 pm
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