Whether you’re preparing to sell your business or looking to purchase one, it’s easy to underestimate the legal complexity involved. You may think that once the buyer and seller agree on a price, the rest is just paperwork. But in practice, buying or selling a small business comes with legal, financial, and operational risks that can have long-term consequences.
At Twisdale Law, PC, we work with both buyers and sellers throughout North Carolina, South Carolina, and Tennessee to ensure their deals are structured properly, liabilities are identified early, and the transaction actually accomplishes what both parties intend.
It’s Not Always Clear What’s Being Bought or Sold
One of the most common issues we see at Twisdale Law, PC is confusion about whether the deal is a full business sale or simply an asset sale. The difference matters.
- In an asset sale, the buyer is purchasing selected business assets (like equipment, trademarks, or client lists), not the legal entity itself.
- In a stock or membership interest sale, the buyer steps into the shoes of the current owner and takes over the company along with its liabilities.
Example: We’ve seen many deals where a buyer believed they were purchasing the entire business, only to realize they were buying a few assets while the seller retained the entity and opened a new business across town. Without a non-compete clause, the seller is free to directly compete with the buyer. Imagine paying your competitor to relocate and start fresh with your customers. This happens more often than you’d expect, and usually there is not a remedy to prevent these actions without the proper legal guidance.
The Purchase Agreement Isn’t Just a Form
Whether you’re buying or selling, the purchase agreement defines the deal. It outlines who is responsible for what, how payment is structured, and what happens if a dispute arises. Relying on templates or handshake terms often leads to misunderstandings or future legal problems.
A properly drafted agreement will:
- Clearly define the assets or interests being sold
- Allocate responsibility for existing debts and liabilities
- Include non-compete and confidentiality clauses where appropriate
- Specify how and when payment will be made
- Address what happens if something goes wrong post-closing
Debts, Taxes, and Unseen Risks
Buyers often assume that purchasing a business means a clean slate, but that’s rarely the case. Unpaid taxes, vendor disputes, and even lawsuits can come with the business, depending on how the deal is structured.
Example: We’ve seen unrepresented individuals come to us after they unknowingly acquired a business with an outstanding state tax lien. Because the deal involved the transfer of key assets, the buyer became entangled in the debt. That one oversight could have been avoided with a proper title search and due diligence review.
Sellers also need protection. Without carefully drafted indemnity provisions, a seller could remain liable for future disputes, even after the business is gone.
Example: We’ve seen situations where after years from the sale of the business, but before the statute of limitations have run, a retired seller was forced into litigation due to an outstanding issue.
Why Due Diligence Matters
A thorough due diligence process is critical for both sides. It allows buyers to verify what they’re getting and gives sellers a chance to disclose any known risks.
Due diligence typically involves reviewing:
- Corporate records and tax filings
- Business licenses and permits
- Contracts and leases
- Employment policies and benefits
- Intellectual property (trademarks, copyrights, licenses)
- Pending or past litigation
An experienced attorney helps guide this process, ensures compliance with state requirements, and makes sure key documents are exchanged and understood.
Protecting Your Interests From the Start
Buying or selling a business isn’t just about closing a deal. It is about protecting your investment, your reputation, and your future. Without legal counsel, it’s easy to miss critical steps, overlook hidden liabilities, or walk away with less than you bargained for.
At Twisdale Law, PC, we help small business owners on both sides of the table. Whether you’re a seller preparing to exit or a buyer exploring a new venture, we ensure the transaction is structured clearly, legally, and in your favor. We serve clients throughout South Carolina, North Carolina, and Tennessee, with offices in Spartanburg, Asheville, and Jonesborough.
Contact Twisdale Law today to schedule a consultation and make sure your next business deal is done the right way.
