Liabilities can be unpaid loans, unsafe working conditions, or even significant benefits packages promised to former employees. When purchasing a new business, knowing to whom the company owes money, and knowing whether or not a new owner will also take over the responsibility for these debts is one of the most basic and most often overlooked points in buying a business.
Items like these are often detailed in the prospective owner’s letter of intent and in the contracts that are signed at the closing deal. Know what liabilities will stay with the current owner and what liabilities will transfer to the new owner.
The area of liability status can be rather complicated. Seeking professional advice on how to determine liability status and how to minimize future liabilities effectively may save quite a bit of money in the long run.
The next section will concentrate on avoiding the most common hazards of selecting a business.
