As a business owner, your hard work, diligence, and business decisions have resulted in certain income and benefits. The success of your business has attracted a buyer and now you are ready to sell the business.
Clients often feel that without the business, they will no longer have liability and are not at risk of being sued. We caution you against this false sense of security. Not only are individual non-business owners at risk of being sued in their individual capacity for a host of reasons, but former business owners, face the risk of being sued by the business buyer in connection with the sale.
Oftentimes the business buyer sues the former owner for misrepresentation. Usually, the former business owner/seller makes claims about the business income or other business benefits, the business buyer asserts that those claims persuaded him/her to make the purchase, and the business buyer feel those claims were not factual. Misrepresentation can also be asserted by the business buyer for the former owner’s failure to disclose a factor that negatively impacts the business. The business buyer then totals the losses incurred based on his reliance on former owner’s misrepresentation and asks the court to reimburse the business buyer and to impose a penalty on the former owner for defrauding the business buyer.
Usually this happens because the business buyer does not run the business the way you did, but depending on what was said (or not said) during the sale, you could end up losing assets defending the suit, or in the form of a judgment against you.
We recommend that anyone selling their business retain counsel to represent them in the sale to avoid losses from a misrepresentation lawsuit or any other lawsuit connected with the sale. In addition to that, we also advise that you consult with an Asset Protection attorney to set up an Asset Protection Plan to ensure that your assets are protected should you be sued in connection with the sale of your business.
At The Presser Law Firm, P.A. our attorneys specialize in Asset Protection. We interpret the law and advise our clients on how to best structure their assets, so that they are protected in any and all situations, including protecting the former business owner now that the business is being sold.
For additional information about Asset Protection Planning, contact The Presser Law Firm, P.A. for a complimentary preliminary consultation. The Presser Law Firm P.A. 6830 N. Federal Highway, Boca Raton FL 33487 (561) 953-1050 or email