By Michael Maddalena
Whether it’s online or in a store, we buy and sell things daily without giving it much thought. But when it comes to the purchase and sale of small businesses, the process isn’t as straightforward.
“It’s not as simple as paying the asking price and stepping into the business,” explains Michael Maddalena, a corporate-commercial lawyer with Burchell MacDougall’s Halifax office.
The sale or purchase of any business, regardless of size or sector, has many details and requires the expertise of a lawyer to complete successfully.
While smaller businesses may not think it’s economical to bring a lawyer into the process from the start, Michael sees the expertise a lawyer provides as a solid investment.
“The basics of a business transfer are the same across all industries,” he continues, “The difference is in the nuances and details, and you need to have a lawyer who understands those nuances and details.”
At the beginning of the process, a buyer or seller will contact a lawyer to draft the agreement for the transfer of the business. This agreement will take into consideration details like price, what is included in the price, property and assets, leases, obligations to employees, and tax requirements.
“A lien search is a key step in the transaction,” Michael says. “No matter the size of the transaction, issues that can pop up during a lien search, such as outstanding payments on equipment leases, need to be dealt with in order to transfer a clear title.”
Determining if the transaction is an asset purchase or a share purchase is also a fundamental part of the process. Tax and other considerations regarding the transaction determine whether a company should be incorporated to effect the purchase
And there are always changes to the business climate and the law to take into consideration.
“For example, more attention is paid to environmental issues nowadays” he explains, “and recent changes in Nova Scotia to limitation periods may need special consideration in drafting the purchase and sale agreement.”
With a broad knowledge of complementary practices, such as estate and succession planning, liability considerations, and real property law, Michael and the corporate commercial team at Burchell MacDougall see the big picture for their clients, whether they’re selling a business or taking on a new venture.
“I don’t look at things in isolation, so I am able to advise my clients on collateral issues and other areas of risk in their new business,” Michael concludes. “I draw from past experiences and bring those to the table for the benefit of the client.”
This article is for information only and is not intended to be legal advice. If you have any questions or would like further information, you should consult a lawyer.