Transfer of Business as a Going Concern Agreement

When a business owner decides to sell their company, there are many factors to consider. One of the most important considerations is whether the transfer of the business will occur as a going concern agreement. In simple terms, a going concern agreement means that the business will continue to operate as it has in the past, with the new owner taking over the operations and continuing to provide the same services or products.

A going concern agreement can be beneficial for both the buyer and the seller of a business. For the buyer, it ensures that they are acquiring a business that is already established and has a track record of success. This can make it easier to secure financing and attract customers. For the seller, it means that they can often receive a higher price for their business since they are selling a fully functional operation.

However, there are also some risks associated with a going concern agreement. For example, if the business has any outstanding debts or liabilities, the buyer may become responsible for these. Additionally, the buyer may need to obtain new licenses or permits to operate the business.

To mitigate these risks, it is important for both parties to carefully review the terms of the agreement before signing. The agreement should outline any financial liabilities and specify who is responsible for paying them. It should also outline any required licenses and permits and specify who will be responsible for obtaining them.

If you are considering a going concern agreement for the transfer of your business, it is important to work with an experienced attorney who can help you navigate the process. They can review the agreement and ensure that all necessary protections are in place to safeguard your interests.

In conclusion, a going concern agreement can be a valuable tool for transferring a business from one owner to another. However, it is important to carefully consider the risks associated with this type of agreement and work with a professional to ensure that all necessary protections are in place.