Buying a business without hiring a corporate lawyer to assist in the purchase is foolish. There are too many complex legal issues to address. Failing to address any of these issues will likely cost you much more than the cost of hiring a lawyer in the first place.
A corporate lawyer with experience in business acquisitions will help you buy what you think you are buying, and will make sure you are not assuming liabilities you know nothing about. For example, some businesses are straddled with debt or have other obligations that mean they should never be acquired at any price (or only in compliance with bankruptcy laws).
Only a thorough legal due diligence review conducted by a seasoned corporate lawyer will protect you and help you determine the future viability of the business.
A corporate lawyer helps you structure your purchasing entity. For example, do you need to create a corporation first to be the buyer? Doing so may limit the risks associated with operating the business.
If you are acquiring the shares of a corporation, there are additional things to consider. Some businesses have complex ownership structures that require careful consideration. If the ownership structure is divided among several investors, the target corporation’s articles or the target corporation’s shareholders’ agreement will likely have to be considered to determine whether there is a formal procedure that must be followed before the business can be sold to another investor. This might involve requiring a percentage of investors to be consulted during a formal meeting about whether a sale should be permitted.
If you are acquiring a distressed business, your corporate lawyer will likely advise you to determine the major creditors and what their rights are during bankruptcy proceedings.
If you are looking to buy a business somewhere in the GTA, we advise you to consult a lawyer before buying the business.