Lawyer for Buying or Selling a Business in New York

At the Law Offices of Albert Goodwin, we have been helping people buy and sell businesses since 2008. I represent clients in transaction involving the following types of business:

• Insurance Agency
• Gas Station
• Shoe Repair
• Nail Salon
• Hair Salon
• Car Wash
• Liquor Store
• Barbershop
• Restaurant
• Laundromat
• Dry Cleaners
• Funeral Home
• Convenience Store 
• Furniture Store or Mattress Store
• 99 Cents Store/Dollars Store/Value Store
• Clothing Store, Shoe Store or Accessories Store

A business transaction is a game in which the rules and the players can be changing. It has a lot of moving parts

It’s important to have someone with you who has been through many business deals like yours before and who has the right perspective to get the deal done to your advantage.

As an attorney involved in buying and selling businesses all over New York, I will act as a trusted advisor and will make sure that the transaction is executed correctly and your interests are protected

So get in touch with my office and make an appointment if you’d like to discuss your transaction.

I look forward to working with you.

A Guide to
Buying a Business

Asset Sale Versus Stock Sale

One of the first questions in any business sale is whether the deal is an asset sale or a stock (or membership interest) sale. The choice has major tax and liability consequences.

In an asset sale, the buyer purchases specific assets of the business such as equipment, inventory, leases, customer lists, goodwill, and intellectual property. The seller keeps the legal entity, which becomes an empty shell. Asset sales are popular with buyers because they generally do not assume hidden liabilities, and the buyer can take a stepped-up tax basis in the purchased assets. They are less popular with sellers because the gain is often allocated across different categories, some of which are taxed as ordinary income.

In a stock or membership interest sale, the buyer purchases the ownership interests in the entity itself. Everything inside the entity, including its contracts, licenses, and any unknown liabilities, comes along with the deal. Stock sales tend to be cleaner from the seller's perspective and often qualify for long-term capital gains treatment.

The right structure depends on the size of the business, the nature of its liabilities, the willingness of landlords and other counterparties to consent to assignments, and the tax positions of both sides. We walk every client through this analysis before drafting paper.

Letters of Intent and Confidentiality Agreements

Most business deals start with a non-disclosure agreement (NDA) and a letter of intent (LOI). The NDA protects the seller's confidential information during due diligence. The LOI sets out the basic deal terms, the proposed structure, the purchase price, the diligence period, and exclusivity. While most LOIs are non-binding as to the deal itself, certain provisions, such as the exclusivity period, confidentiality, and choice of law, are usually binding. A poorly drafted LOI can lock a seller into terms before they have had a chance to think things through.

Due Diligence

Once an LOI is signed, the buyer conducts due diligence. We help on both sides of this process. On the buyer side, we organize the diligence requests, review the documents, and flag the issues that need to be negotiated into the purchase agreement or resolved before closing. On the seller side, we help prepare the data room and respond to requests in a way that does not give away leverage.

Typical diligence items include financial statements and tax returns for at least the last three years, the corporate book including formation documents and minutes, all material contracts, the lease, the employee roster and any employment agreements, intellectual property registrations, licenses and permits, pending or threatened litigation, and outstanding indebtedness.

The Purchase Agreement

The purchase agreement is the heart of the transaction. It sets the purchase price and the way it gets paid, the assets being transferred or the interests being sold, the representations and warranties of each side, the indemnification structure if something goes wrong after closing, the conditions to closing, and the covenants that govern the period between signing and closing.

Some of the most heavily negotiated provisions are:

• Purchase price adjustments. Working-capital and net-debt adjustments are common in deals where the closing date is later than the signing date, and small differences in definitions can shift large amounts of money.
• Reps and warranties. The seller stands behind certain statements about the business. Sellers want these narrow and time-limited; buyers want them broad and durable. Knowledge qualifiers, materiality qualifiers, and survival periods are all negotiated.
• Indemnification. If a rep turns out to be wrong, who pays and how much. Caps, baskets, and survival periods all matter.
• Escrows and holdbacks. A portion of the purchase price is often held back for a period of time to fund any indemnification claims.
• Non-compete and non-solicit covenants. The seller usually agrees not to compete with the business or solicit its customers and employees for a period of time after the sale. The reasonableness of these restrictions is governed by New York case law.

Lease Assignments and Landlord Consents

For most storefront businesses, the lease is the single most valuable asset. The lease almost always requires the landlord's consent to assign, and landlords use that leverage to ask for upgrades to the lease terms, personal guaranties, security deposits, or rent increases. We negotiate these consents and try to keep the buyer in the same economic position as the seller, no worse.

Liquor Licenses, Permits, and Regulatory Approvals

Many business sales involve regulated assets. A restaurant or bar sale almost always involves a liquor license transfer through the State Liquor Authority. A gas station sale involves environmental licenses, fuel inventory transfers, and often UST registrations. A pharmacy or healthcare business involves DEA, DOH, and Medicare/Medicaid approvals. We coordinate these regulatory pieces alongside the closing.

Bulk Sales Notices and Sales Tax Clearance

New York imposes a "bulk sales" notification requirement on the sale of business assets. The buyer must notify the New York State Department of Taxation and Finance at least ten days before taking possession of the assets or paying for them. If the buyer fails to comply, the buyer can be held liable for any unpaid sales taxes the seller owes. We file the bulk sales notice and follow it through to a tax clearance certificate from the state.

Closing and Post-Closing Matters

At closing, all the moving parts come together. We coordinate the funds flow, the signing of the closing documents, the transfer of titles and licenses, the assignment of contracts, and the delivery of corporate records. After closing, there is still work to do: changing bank accounts, filing necessary tax forms, updating registrations, and following up on any post-closing adjustments or earnout calculations.

Earnouts, Seller Notes, and Other Deferred Payment Structures

Not every business deal closes for cash on a single day. Many include some form of deferred payment. The two most common are earnouts and seller notes. An earnout ties part of the purchase price to the future performance of the business, often measured by revenue, gross profit, or EBITDA over a one- to three-year period. Earnouts can bridge a valuation gap between buyer and seller, but they are also a leading source of post-closing disputes. The earnout language has to spell out exactly how the metric is calculated, what accounting policies apply, how the buyer must operate the business during the earnout period, and how disagreements are resolved. A seller note is a portion of the purchase price that the buyer pays over time, usually with interest, secured by the assets or stock being sold. Seller notes typically include subordination provisions for any senior bank debt and remedies if the buyer defaults. We have negotiated these terms hundreds of times and know which traps to avoid.

Financing Contingencies and SBA Loans

Many small business acquisitions are financed through SBA 7(a) loans. SBA financing has its own rulebook, including required terms in the purchase agreement, restrictions on seller financing, and limits on seller participation after closing. We coordinate with SBA lenders to make sure the loan funds on schedule and the deal structure complies with the program rules. For larger deals, we work with conventional banks, private credit lenders, and equity sponsors to align the legal documentation with the financing.

Employment Issues at the Closing

Most buyers want to keep the existing employees. The mechanics depend on the deal structure. In an asset sale, the seller terminates the employees on the closing date and the buyer hires them effective the next morning. The buyer needs to be ready with offer letters, new payroll, benefits enrollment, and I-9s. In a stock sale, the employees stay with their employer, so there is less administrative work, but the buyer inherits any unfunded liabilities such as accrued PTO, unpaid commissions, or pending wage claims. Either way, key employees often want their own employment agreements with the buyer, and the negotiation of those agreements is often woven into the deal timeline.

Why Work With Our Office

Business transactions reward experience. We have been doing these deals for more than fifteen years, on both sides of the table, in industries ranging from professional services to franchised food to neighborhood storefronts. We know what gets negotiated and what does not, what landlords expect, what state agencies will require, and what hidden problems to look for. When you bring us into the deal early, we can usually save you more than the cost of the legal fees just by spotting risks before they become problems.

Call the Law Offices of Albert Goodwin at 212-233-1233 or email [email protected] to discuss your business purchase or sale.