Business Buying & Selling Insights
Did you know that when you buy or sell a business you do not actually buy/sell the legal entity itself?
You almost always ONLY transfer (sell) the assets of the business (good will, inventory, etc). Then the original entity from the Seller dissolves.
Why does it happen this way?
Because if you acquire the actual “legal entity” you step “in the shoes” of the other party and are potentially liable for a variety of issues, known & unknown at that time. Therefore the seller dissolves the original entity to close the transaction.
Why does the seller dissolve the business?
So they no longer have any more potential liabilities or expenses to be paid. Furthermore, it may be required in the P&SA and Non-Compete Agreement.
There can be many other reasons as well.
