The standard practice is either to purchase the existing Hawaii business’ stock (if a corporation) or membership interest (if an LLC), or to purchase just the assets (and not the liabilities of the Hawaii business). Because most people do not want to assume the liabilities of the existing Hawaii business, the asset acquisition route is more common. There may be reasons to nevertheless do a Hawaii stock acquisition or sale such as you are the majority shareholder of the Hawaii corporation or because Hawaii regulations grandfather certain benefits to the existing corporation (such as boat permits and liquor licenses).
Acquiring a Hawaii Business – 1st Steps
You need to set up a due diligence period to inspect the Hawaii business and check their books. A seller would want to have you sign a Hawaii Non-Disclosure and Confidentiality Agreement that provides that you can see their books and contracts, but cannot make excessive copies, can only show it to your consultants on a need-to-know basis, and you will return the documents. They may even limit your ability to use the data to compete with them in case your Hawaii acquisition does not close.
We would draft up the Hawaii Stock Purchase Agreement or the Hawaii Asset Purchase Agreement to reflect the deal points reached between seller and buyer, as well as what conditions need to be satisfied prior to closing such as loan commitments, landlord consents, and Hawaii plant closing notices.
You may decide to retain the seller for a period to help you run the business and transition clients. The former owner will need to sign a Hawaii Independent Contactor Agreement documenting such things as his or her pay, term, and the level of assistance. You may want to also have the seller sign a Hawaii Non-compete Contract so that the seller does not compete against you after selling the Hawaii business to you.
Get a Hawaii Business Attorney on Your Side
There are other issues you need to consider and we would be happy to discuss them when you sign up as our client. As you can see, there is a lot of work to do things right, and having a Hawaii lawyer on your side is worth the price. We often have people come to us after a Hawaii purchase goes sour, and we can only point out how and what mistakes were made.
Contact us today for a consultation on acquiring a Hawaii business. We can guide you with sound legal advice from our years of experience.
More Articles on Hawaii Corporate and Business Law
- Duties Owed By a Hawaii Agent to its Principal
- Hawaii LLC Formation: Manager-Managed Versus Member-Managed
- How To Acquire An Existing Hawaii Business
- Incorporating In Hawaii
- Issues You Must Know About In Your Purchase or Sale of Medical & Dental Practices in Hawaii
- Owner’s Liability for the Debts and Obligations of a Hawaii Limited Liability Company
- Setting Up Your Hawaii Business Entity for the Small Business Administration’s 8(a) Business Development Program
- Transacting Business in Hawaii and Licensing
- What Happens When a Hawaii Corporation Has Been Administratively Dissolved?
- Why Using the Hawaii Department of Commerce and Consumer Affairs Business Registration Division’s Limited Liability Company Articles of Organization (Form LLC-1) May be a Mistake
- Why You Would Need an Operating Agreement for Your Hawaii LLC
