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Q: As a Buyer, why should I use a business “Transfer Agent?”
A: This is a most common question. Many individuals who purchase a business feel they have a great relationship with the Seller and don’t see the need for any third party interference. However, there can be many skeletons in the closet from previous or current owners. It is a fact that a Buyer truly cannot be sure of a “free and clear conveyance” without proper record searches. These searches are a Buyer’s only assurance that they cannot be held liable for future claims against the business, whether from a previous seller, lender, or government agency such as the State Tax Department. Most Buyers are unaware that they can be held liable for any taxes, audits and assessments prior to their ownership. Buyer’s can be held accountable for hundreds or even thousands of dollars that surface unexpectedly, which happens all too frequently when no Transfer Agent is involved. Where does the Buyer go to reclaim these expenses if the Seller has left the area, is no longer available or just simply doesn’t care? Is it worth a few hundred dollars at the time of transfer to avoid the possibility of spending thousands more? The services of BCN can help you avoid such unexpected challenges.
Q: As a Seller, why should I use a business “Transfer Agent?”
A: In many business sale transactions the Seller often finances a portion of the purchase price to consummate the sale. If proper documentation is not in place, including a Promissory Note, Security Agreement, Personal Guaranty and recorded Financing Statement, the Seller may have difficulty collecting on the debt should any default occur. The only protection a Seller has is documentation properly executed by the Buyer and proper filings made with the State. In addition, most sale agreements provide for specific training. The Seller should have the Buyer sign off on the training, a document we also provide, to avoid any future concerns of the Buyer claiming they cannot continue to pay using a lack of knowledge excuse. Further, those same searches that the Buyer appreciates, are highly beneficial to the Seller as well should any skeletons arise.
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