While the answer may vary depending on the kind of business you are buying, there are certain things you should always look for during your due diligence period in any asset purchase no matter the size or nature of the business. Some of those include (and this is by no means an exhaustive list!): You’ll need to look into several other essential issues during due diligence. An experienced business attorney can advise you on those specifics and offer guidance reg
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Business and commercial transactions usually include a Letter of Intent (“LOI”), Term Sheet, or Memorandum of Understanding (“MOU”) during the early stages of negotiation. The parties usually understand that the LOI (or MOU) outlines the fundamental terms of the transaction and typically includes an “agreement to agree” to a more formal, final agreement at a future date. The question often arises despite these general, mutual understandings: in South Carolina, is a Letter of Intent or Memorandum of Understanding legally binding? In general, the law in South Carolina encourages parties to negotiate freely without the fear of exposing themselves to liability prematurely. If the terms of the alleged agreement are indefinite or subject to future negotiation, the LOI or MOU would…
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The best way to answer that question is to start with a basic understanding of the difference between an asset purchase and a stock purchase. In an asset purchase, the buyer is usually acquiring the assets of the business they are buying – not the liabilities (with some exceptions) and not the entire business itself. Generally speaking, in a stock purchase, the buyer purchases the entire business entity, including all the assets and all the liabilities. The assets might include, for example, equipment, furniture, fixtures, contracts, customer accounts, accounts receivable, inventory, the entity name, a commercial lease or lease options, website and marketing platforms, and the like. A liability may, for example, be a UCC lien on the fixtures of…
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