Business Acquisition

[stuynet]

What is the name of your state (only U.S. law)? NY

I'm in the process of buying a laundromat business. The laundromat consists of the laundry machines and the employees. The business is leasing the space. In regards to the assets such as cash whom does that transfer to? Can the old owner take all the cash out? Also, would it be reasonable to ask the current owner to leave say 6 months of working capital in the business? Of course I will get an attorney but I like to know these things beforehand. Thanks.

 

[Some Random Guy]

I'm in the process of buying a laundromat business. The laundromat consists of the laundry machines and the employees. The business is leasing the space.

Are you buying the business or just the assets of the business? Buying assets is simpler because you don't have to pay the outstanding debts of the old company. However, you need to make sure that you have the proper arrangements with the landowner for a new lease.

In regards to the assets such as cash whom does that transfer to? Can the old owner take all the cash out?

Depends on what your sales contract says. Unless your contract says that the previous owner will be leaving cash in the business, expect none to be left.

Also, would it be reasonable to ask the current owner to leave say 6 months of working capital in the business?

No. If you want the previous owner to leave $100K in the business, then expect the selling price to go up by $100K, making it a pointless exercise. If you need capital to run your business, then get a loan against the assets of the business or against your peronal assets.

 

[stuynet]

I am assuming there is a difference between an asset sale and an outright sale of the business? The business does not have any debt. With an asset sale does that mean I purchase just the assets and the registered name/ bank accounts etc... do not transfer to me.

 

[Some Random Guy]

in an asset sale you can also agree to buy the rights to the business name and logo, which can be considered assets of the business.

Are you 100% sure the business has no debt? You have seen all utility bills and have seen the tax returns and employee withholding send to the IRS? You have seen the sales and use tax returns filed with the state? If your business sale goes through on the 14th of the month, do you plan on issuing your first paychack to your employees the next day? Are you sure that somebody's expensive comforter wasn't shredded in the washer last week and she plans on suing the business next month?

Talk to your own lawyer before proceeding with the purchase.

 

[stuynet]

In terms of debt I was thinking loans, but I will get an attorney. Just wanted a little knowledge beforehand. Thanks for your replies.