Buying or Selling a Maryland Business:
Transferring the Business Assets
Maryland Business Sale Lawyer
In this article on the purchase and sale of a Maryland business, I address issues relating to transferring assets during a business sale. For information on other issues and concerns in a business transfer, please see my article, Buying or Selling a Business in Maryland.
When purchasing a business, the buyer must be sure the assets are properly transferred, no matter whether the sale is done as an asset sale or as a sale of the entity.
Transfers of Tangible Assets in a Business Sales
When using an asset sale, the transferring documents must identify the assets being purchased. If the transaction is a stock sale, the buyer should still confirm that the company they plan to purchase actually owns the assets they expect to receive. You don’t want to discover after the sale that the shop’s tools are really owned by the mechanic, the clothing racks are rented, and the forklift is owned by the seller’s other business.
The assets to be transferred need to be accounted for in the documents for an asset sale. Assets that can be touched, such as equipment, inventory and supplies, should be transferred by using a Bill of Sale.
New deeds must be recorded for any real estate being transferred with the business purchase. You will need to re-title all company vehicles with Maryland’s Motor Vehicle Administration. You will want to make sure you have all documentation that the MVA will require to transfer the vehicles signed at the time of the closing.
Transferring Leased Equipment in Business Sale
Businesses commonly lease some of their equipment. The new business owner will likely need to assume some of those leases to not interrupt the business. The seller and buyer will likely need to contact the owner of the leased equipment to have the lease transferred. Even if the business transfer is a sale of the entity, the seller may have provided personal guarantees that the seller will want transferred to the buyer.
You can find out more information about real property transfers and leases in a separate article.
Transfers of Intellectual Property and Intangibles
The buyer will also want all intellectual property and intangibles transferred as well. Intellectual property would include trademarks, patents, trade names and similar. There could also be other intangible assets that need to be transferred as well. The client lists, websites, phone numbers, software, and similar can have substantial value.
Generally intellectual property and other intangibles will need to be transferred using an assignment. Careful attention should be given to intellectual property since many state and federal laws can affect your rights to use that property.
You will want to make sure, for instance, that the company and not a contractor owns work they have provided to the company. You may want to review contracts with those contractors and employee agreements to ensure no one else can claim ownership of those assets.
As the new owner of intellectual property, you will want to update ownership and contact information with the regulatory agencies. You would not want to miss notices that certain valuable trademarks need to be renewed.
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Words From Clients
Jeff was a great attorney to work with on the sale of our business. When problems popped up for the buyer to close, his manner kept everyone calm, both us and the buyer, and he came up with great solutions. Jeff's experience definitely shows, and we'll be happy to work with him again. - Elizabeth B.
Our CPA recommended Jeff to help us with our estate planning and transferring our business to our kids. Jeff was a friendly guy and understood the business and personal issues we were concerned about with giving the business to our kids. He came up with a great plan that reduced the taxes and made sure the business would stay open after we retired. We think our estate plan we made with Jeff will really help our family after we're gone. We are happy our CPA recommended him and with the work Jeff did for us. - Tom D.