Possible Disadvantages of Purchasing a Business

AdobeStock_561407813-300x115There are many risks involved with buying a business. While it is not possible to protect oneself from every potential threat, these risks can be successfully mitigated with effective legal strategies. The Los Angeles mergers and acquisitions lawyers at Structure Law Group, LLP work with entrepreneurs across all industries. Our experience allows us to advise our clients on the best strategies for mitigating risk in all types of mergers and acquisitions. With the right protection in place, Los Angeles business owners can set their newly formed businesses up for success on the first day of operations. Learn more about some of the most common disadvantages of purchasing a business.

Debts, Liabilities, and Other Problems

Due diligence is one of the first steps in any acquisition or merger. In this critical process, the buyer conducts thorough investigations of all aspects of the target business to identify debts and liabilities. A cursory examination is not enough to protect your business from the debts and liabilities of an acquired business. Accountants should thoroughly examine the financial statements to verify the figures that have been presented. Debts should be carefully analyzed. Can they be restructured? Are there better tax strategies for existing debt? In addition to financial liabilities, legal liabilities must also be carefully assessed. Our Los Angeles M&A lawyers thoroughly analyze all aspects of business operations to identify all potential liabilities. Administrative fines, civil judgments, and even corporate criminal liability can cause problems for a reconstituted company after a merger or acquisition.

The New Business Could Be a Bad Fit for Your Existing Business

The human aspects of business can be difficult to predict. While it is not possible to predict all human responses to a merger or acquisition, it is important to consider how an existing company’s culture will fit with the culture of the business that is merging or being acquired. What are each company’s goals? What measures are used to attain these goals? Will all employees from the target company be retained at the reconstituted company? Are there clear expectations for these employees? Strategic planning and a well-staffed HR department can help reduce problems in fitting two separate company cultures together.

Unknown Market Conditions

The recent coronavirus pandemic tested the limits of nearly every industry across the globe. Almost every business owner on earth was confronted with the brutal reality of unpredictable market conditions. In the wake of these painful lessons, effective business owners are taking the opportunity to plan for unknown market conditions in the future. It is important to consider the many different types of business insurance that are available and which policies will maximize your company’s protection from unknown market conditions. In addition to defensive insurance strategies, business owners should also consider proactive planning. With a contingency plan for supply chain disruptions, understaffing, and other foreseeable problems, your business can weather these market conditions successfully. Structure Law Group’s mergers and acquisition attorneys in Los Angeles work with business owners to prepare for all kinds of market conditions.

The Right Los Angeles Mergers and Acquisitions Lawyers for All Business Purchases

The Los Angeles M&A attorneys at Structure Law Group, LLP have years of experience handling all types of business sales. Call (310) 818-7500 or contact us online to schedule a consultation.