When buying a business in New York, we recommend a more nuanced approach that contemplates matters beyond a mere cost benefit analysis. Small businesses are the engine of the American economy. According to a 2012 Small Business Administration report, small businesses “produced 46 percent of the private non-farm GDP in 2008 (the most recent year for which the source is available), compared with 48 percent in 2002.” New York is one of the best places to establish a business in many industries, because of its educated labor force, high net worth and business infrastructure.
Here are a few of the important steps to consider when buying a New York business.
- What is the Deal Structure?
When buying a NY small business, consider the reason for the purchase. The reasons shall, often, dictate the structure of the purchase and the risks associated with the anticipated deal.
What is the primary reason for the purchase: The Business Name; other Intellectual Property; The Employees; the Company Assets; Cash Flow; Know How; or the Customer List?
- Due Diligence, Due Diligence & More Due Diligence
We often see buyers consider the opportunity and not consider the risks. Often NY business brokers are great at building in the minds of purchasers a sense of urgency. The reality is many opportunities exist and it is more important to get the right opportunity in order to save time and money. Reality is the, only, asset we can’t duplicate is our time. Without a professional due diligence report, you may be wasting your time. For a basic Due Diligence Checklist, please take a look at our Joint Venture Due Diligence Checklist, the checklist can be utilized, also, for purchasing of a New York business.
- Asset Purchase Agreements and other agreements
Don’t simply utilize the standard asset purchase agreement that are put forward by business brokers, sometimes these agreements are adequate, however, usually these asset purchase agreements are not adequate. For some of the basics agreements necessary for operating a business in New York, please see: New York Business Agreements