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quit claim for a business
cugelert
subscriber Posts: 7
Can an owner of an established business use a quit claim deed to transfer ownership to another company or individual even though the property is leased out and has no real estate value, and nothing beyond inventory, track record, and FF&E?...
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The person who provides a quit-claim deed makes no warranty or representation that they actually own anything.
Generally the quit-claim deed is used in relation to real estate. Since you state ther is no real estate involved why would you want to use this document?
Are you the buyer or seller?
Great point, thats why I needed some input...
I am the buyer... Is there any such document or deed structured to allow another entity to take control of an establishment or business even though real estate is not part of the transfer itself?
And yes, I still want to acquire it even without RE. It has excellent cashflow and trackrecord with additional benefits too. Thaks for the response...
Jerik
How you buy the business is important to consider and will dictate the documents used to consumate the transfer.
Theoritically it seems very easy, but as you say, it depends on how its structured for purchase.
I based my question on a site I visited that offers quit claims for all staates and noticed a deed from one corporation to another but it didn`t offer details as whether real estate was a factor.
jerik
How much time do you have to put this together?
Do you have any agreement in place with the current owner
Is the business currently a corporation/ sole proprietor/ or?
The specs are ...
1.Owner is asking $375,000. 2.Gross annual is $735,000. 3.Net annual is $200,000. 4.Estimated value at $410,000. 5.No real estate. 6.He will take $350,000 cash today. 7.Business is completely free and clear.
Jerik
As for time... the sooner the better. In my profession, you don`t come across deals like this, but once in a lifetime.
I`ve told him that I am very interested and he did agree to take the cash tomorrow thats 25,000 less. Even at 350,000, a business pulling in 735,000 in gross annual is unheard of, so it won`t be long before someone comes along with a better financial position and sees the same opportunity.
I`m not sure at this time how his company is structured, although his broker did say he has another business he wants to focus more on, and this one is taking to much of his time away from his other business.
Jerik
At this point I think we should move "off line" if we are going to delve into the details of your specific situation/needs.
You can reach me at [email protected]</A>
You need a purchase agreement that spells out a number of items. This needs to be thought through. How you allocate the purchase price will matter as well.
My two cents.
Mitchell
A purchase agreement... Thats great. And can this be accomplished over the phone between the owner and buyer, or do we need attorneys on both ends from start to finish?
Jerik
Jerik,
Here is the situation. You are buying a business. I don`t knwo what information about the business you possess, but you need to have an understanding of what the financials actually are, and verify that the facts that the company asserts are true - we call this due diligence. You have heard that term thrown around a lot, but that is actually what it means. OK. So before you spend money on a purchase agreement, that is what you need to do first.
I know of no way to draft a purchase agreement over the phone. One side needs to start it. You will wither purchase the assets of the business or the equity.
Start with verifying that the business is what it is, and if you have questions, I am happy to help. Then, if you are saitisfied with the information, go to the next step of a purchase agreement. Figure out if you want to acquire the busines as is, assuming the risks involved, you will do a equity purchase. Do you know what form the comapny is? Do you know how the current owner got the business? Have you discussed the all important consulting agreement and covenant not to compete?
Get ahold of me after you have done your investigation and we will go from there.
Mitchell
Those things have crossed my mind as well but not as detailed.
I am still investigating this business but being in a different state, I can only go so fast. So I will keep what everyone has mentioned during this thread in mind and try to get everything answered.
jerik
I was doing more research on my topic here, and came across the use of a letter of credit. I understand its mostly used internationally for import/export, but is it ever used (or can it),for a purpose like the one I propose to acquire a business???
jerik
Usually acquisition financing is through a mix of equity and secured debt financing, seller financing, A/R financing, subordinated debt or debentures. Typically, letters of credit are used by an ongoing business to establish that the draft they are about to make will be accepted.
I`m looking at it like this... If there is a quit claim specifically for real estate transactions, is there any such technique, form, or type of filing that will get the same type of results when its a business?
Jerik