Albo & Oblon, L.L.P - Arlington/Main Office.
2200 Clarendon Blvd.
Ste. 1201
Arlington, VA 22201
(703) 312-0410
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 Albo & Oblon, L.L.P -- Fairfax County Office 6367 Rolling Mill Place
Ste. 102 Springfield, VA 22201 (703) 455-0046
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Albo & Oblon, L.L.P. -- Norfolk/Hampton Roads Office World Trade Center
101 West Main Street
Ste. 435
Norfolk, VA 23510 (757) 200-7900
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Albo & Oblon, L.L.P. -- Roanoke/Salem Office
113 East Main Street
Salem, VA 24153
(540) 389-4498
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Albo & Oblon, L.L.P. -- Washington, D.C./Maryland Office 641 Indiana Avenue N.W.
Second Floor Washington, DC 20004 (202) 386-7470
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Business Transactions

Q. I am considering acquiring someone's business for an agreed payment amount. He says that we can use one lawyer to save money and close on the deal. Is such an approach safe, and what considerations factor into buying an operating business?
A. While it may be an enticing idea to fold an entire business acquisition into one simple document with one attorney, such an approach is not appropriate. The seller's counsel cannot validly represent the buyer in the same deal since that would constitute a conflict of interest. From a practical standpoint, a buyer should perform a "due diligence" review process of the business before purchasing to assess, for example, what kinds of potential liabilities he or she is about to buy. Such factors in turn may have a significant impact on the price one is willing to pay for the business.
Q. When considering a purchase of a business, what kinds of items should I be wary of while proceeding down the path of negotiating with the other person? Is there a possible danger in discussing a purchase without legal documents in place?
A. One possible stumbling block involves the question of whether a person has legally bound himself to actually purchase the business as negotiations are proceeding. A prudent course may call for a Letter of Intent, sometimes referred to as a Memorandum of Understanding. In such a document, the basic contours of the potential deal would be outlined to assure everyone is literally on the same page. Critically, such a document should make clear from the buyer's perspective that satisfactory completion of a "due diligence" review is a condition precedent to one's obligation to close any binding deal.
Q. I am purchasing a business that has several offices located in the Washington metropolitan area, but my main current business location is Rockville, Maryland. The owner of the business I am negotiating with is retired and currently lives in Florida. What can I do to prevent a situation where later possible disputes could be dragged into courts located in other states, which would greatly increase my worries and future legal bills?
A. One would be wise to consider such an issue when considering whether to buy or sell a business. When preparing transactional documents counsel ordinarily includes a provision called a "forum selection clause." Simply put, a Maryland purchaser does not want to be dragged down to Florida to litigate a dispute when the business is located regionally. A clause making the location of dispute resolution clear can easily avert this problem.
Q. I am selling a business to an individual, who told me the other day that our deal should include a provision that if there is a dispute regarding the transaction we'd agree to binding arbitration. Is that a good idea?
A. There are pros and cons to arbitration. Arbitration sometimes has the reputation of supposedly being faster and cheaper, but that is not always the case. Arbitration is a less formalized process with loose evidentiary rules, and your case can be adjudicated by one person, the arbitrator, who may not understand your business and could reach the wrong result. Even worse, the person who loses arbitration has no distinct right of appeal, so you may be stuck with a result that is incorrect. In contrast, the traditional state and federal court system has clearer evidentiary rules and permits appeals to correct reversible error. In some state and federal courts, like many in Virginia, the courts can be faster and more cost effective than arbitration.
Q. Our company wants to acquire another business. Will doing so make our company be liable for the debts and liabilities that business?
A. It depends on the nature of the acquisition transaction. In general, if a company purchases the assets of another company, it will not be liable for the debts or liabilities of that business. However, there are exceptions to this rule. In Virginia, a company may be liable if it expressly or impliedly assumed such responsibilities, if the circumstances of the transaction qualifies as a de facto merger of the two companies, if the purchasing company is a mere continuation of the other company, or if the transaction was fraudulent. It is extremely important to have the advice and counsel of an attorney in the acquisition process to avoid such pit-falls.

Consultation
Contact us today for an initial consultation at (703) 312-0410.  We are located at 2200 Clarendon Boulevard, Suite 1201, Arlington, Virginia  22201.  We also have branch offices in Fairfax County and Richmond.

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Disclaimer: Albo & Oblon, LLP provides the information in this web site for informational purposes only. The information does not constitute legal advice. The use of this site does not create an attorney-client relationship. Further communication with our attorneys through the web site and e-mail may not be considered as confidential or privileged. Please contact our attorneys if you wish to discuss in more detail the contents of this web site. David A. Oblon, Albo & Oblon, L.L.P., 2200 Clarendon Boulevard, Suite 1201, Arlington, Virginia 22201 is responsible for this web site. Web site designed and maintained by PowerAdvocates