Buying and Selling a Business.

Every Oregon business sale takes one of two legal forms: an Asset Sale, in which case there would be an Asset Purchase Agreement, or a Stock Sale, which would involve a Stock Purchase Agreement. Choosing the right way to structure the sale, with the help of your accountant at the very beginning of the transaction, determines the taxes both parties pay at closing and for years afterward. Michael Paluska brings more than thirty years of business and real estate transactional practice to sellers and purchasers of Willamette Valley businesses, from agricultural operations and nurseries to retail and manufacturing companies, handling the transaction from the Letter of Intent through closing.

Asset Sale or Stock Sale: the first decision in every transaction

The structure question comes before everything else, because the two forms produce very different results for the seller and the purchaser.

In an Asset Sale, the purchaser buys the assets of the business, such as equipment, inventory, customer lists, goodwill, and the business name, and the selling company keeps its legal existence and its liabilities unless the parties agree otherwise. Purchasers often prefer this structure because it lets them acquire the business without automatically taking on the seller’s debts and obligations. The transaction is documented with an Asset Purchase Agreement.

In a Stock Sale, the purchaser buys the ownership of the company itself, the stock of a corporation or the membership interests of an LLC. The company continues exactly as it was, with the same contracts, licenses, and history, under new ownership. Sellers often prefer this structure for its tax treatment and its clean exit. The transaction is documented with a Stock Purchase Agreement.

Neither structure is automatically better. The right answer depends on the type of business, its liabilities, its contracts and licenses, the financing, and the tax position of each party. That is why the structure decision is made at the very beginning of the transaction, in a planning meeting with you, Michael, and your accountant, and why the purchase price allocation that follows from it is worked out with your accountant before closing. Both parties report that allocation to the IRS on Form 8594 in an Asset Sale, and getting it right affects your taxes at closing and for years after.

What happens when a business sale goes wrong

Most business sale problems trace back to two mistakes: the wrong structure chosen at the start, and due diligence that missed something the purchaser now owns. Both are avoidable, and both are far cheaper to prevent than to fix.

The structure mistake compounds over time. When the Asset Sale or Stock Sale decision is made by default instead of by planning, the tax consequences can last for years for both parties. When the purchase price allocation is addressed for the first time while the accountant is preparing the taxes, it is too late; the result can be thousands of dollars in taxes that may have been saved if the planning was done correctly at the start of the transaction. This is what more than thirty years of experience brings to the transaction. That is why the meeting with your accountant happens at the beginning of every sale or purchase Michael handles, never after the fact.

Purchasers inherit more than they expect. Under ORS 657.480, when a trade or business transfers, the unemployment tax experience of that business transfers to the acquiring employer, so the seller’s rating history follows the business, and Oregon payroll tax deficiencies can follow a successor employer as well. In an Asset Sale, leases, contracts, and licenses do not automatically move to the purchaser; each one has to be identified and properly assigned, with consents obtained where the contract requires them. A missed assignment can leave a purchaser running a business without the lease, the supply contract, or the license it depends on.

Sellers lose value to bad records. Every serious purchaser conducts due diligence, and a company with incomplete minutes, an outdated Operating Agreement, or gaps in its Shareholder List gives the purchaser grounds to reduce the price or walk away. Oregon corporations have a statutory duty to keep minutes of shareholder and director meetings as permanent records under ORS 60.771. A clean corporate record is one of the least expensive ways a Willamette Valley business owner can protect the value of a future sale, and it is exactly what Michael’s Corporate Minutes and Compliance service is built to maintain.

What Michael does on a business sale or purchase

Michael represents both sellers and purchasers of businesses, in roughly equal measure, and handles the transaction from the first meeting through closing. He never represents both sides of the same transaction; the party on the other side has their own attorney, and Michael works with that attorney to move the deal to closing.

A sale or purchase engagement typically covers:

The first meeting

You and Michael walk through the business, the reason for the sale or purchase, the assets involved, and whether real property is part of the transaction. From that meeting Michael identifies the issues that will shape the deal.

The accountant meeting

The next step is a planning meeting with you, Michael, and your accountant. This is where the Asset Sale or Stock Sale structure is chosen and the purchase price allocation is planned, before the transaction closes, when the planning can still save you money. If you do not have an accountant, Michael will introduce you to one he has worked with during his career.

The Letter of Intent

Michael drafts the Letter of Intent after meeting with you, so the key business terms, the structure, and the timeline are set down before either side spends money on full transaction documents. If a Letter of Intent has already been drafted when you come to Michael, he goes through it with you and makes any revisions needed before any of the transaction documents are drafted.

The transaction documents

Michael drafts and negotiates the Asset Purchase Agreement or Stock Purchase Agreement and the documents that support it, working with the attorney representing the other side. When Michael represents the purchaser and the other side’s attorney drafts, Michael reviews and negotiates every document to protect your position.

Due diligence

For purchasers, that means reviewing the corporate records, contracts, leases, and licenses of the business you are buying. For sellers, it means having your records ready before the purchaser’s attorney starts asking.

Specialists where the deal needs them

If the transaction includes a non-compete, Michael works with an employment attorney so that piece is handled correctly, whichever side you are on. If real property is part of the transaction, the closing runs through a title company, and Michael’s Commercial and Agricultural Real Estate practice covers that side of the deal. If the sale is seller financed, an escrow company is typically brought in so payments are made and received correctly by the respective parties.

Michael’s practice is transactional only. He does not litigate, and that focus is why the documents are drafted to prevent disputes rather than to win them later.

Who this is built for

Michael’s business sale and purchase practice serves the owners of closely held Willamette Valley companies, the businesses that anchor Salem, Keizer, Marion County, and Polk County.

On the selling side, that is often an owner who has spent decades building a company and is selling to retire, to move on to the next venture, or to hand the business to a buyer who will carry it forward. Many have never sold a business before and will never sell one again, which is exactly why the structure and the planning matter so much on this one transaction.

On the purchasing side, it is often a first-time buyer acquiring an established business rather than starting from scratch, or an existing owner adding a location or a competitor. A purchaser who has never bought a business before needs someone who has seen what goes wrong and drafts to prevent it.

The businesses themselves run the full range of the local economy: agricultural operations and nurseries, retail businesses, manufacturing companies, and the service businesses in between. Some transactions include the real property the business sits on; others are the business alone. Michael has handled both throughout his more than thirty years of practice in Salem, Oregon.

If your transaction is a large corporate merger or acquisition with institutional investors, that is a different kind of deal handled by a different kind of firm. This practice is built for the owner selling a business or buying a business here in the Willamette Valley.

How a business sale or purchase works, step by step

Every transaction is different, but a business sale or purchase Michael handles generally follows this sequence:

How long does it take? It varies with the complexity of the business and the financing. An owner financed transaction typically runs a few months from start to finish. Bank financing or a Small Business Administration loan typically takes more time.

What a business sale or purchase costs

Michael does not charge a flat fee for business sales and purchases, because each transaction is unique. The fee depends on the structure of the deal, whether real property is part of the transaction, the financing, the condition of the records, and how much negotiation the documents require.

What Michael does instead is estimate a fee range before starting, after your first meeting, when the scope of the transaction is clear. You know what the work is expected to cost before the work begins, and if something changes the scope along the way, you hear about it then, never on the invoice.

Set against the size of the transaction, the legal fees are a small fraction of the purchase price, and the two most expensive outcomes in a business sale are the ones good planning prevents: a transaction that fails, and taxes that did not need to be paid.