Buying the entity (telling you what you want to hear)

[Jorge De Jesus]

Hello BP, really hope you can help with this one! It occurred to me in my last transaction most people are more interested in making their top line number work . And if you get creative with how you make it happen it doesn’t matter, so long as they keep hearing the top line number. What if I wasn’t interested in the SFR in your LLCs portfolio only the Multifamily? If you were ready to move away or retire and we’ve become best buds, you want me to take everything! You’re done! Could I buy the LLC, keep everything set up “as-is” just change the agreement to my name and my partner’s? That way I can give you X amount for a piece of paper instead of telling you I’ll give you X amount for property A property B property C D E F G... just feel it sounds more agreeable? Anyone done this? Successfully?

[Frank Chin]

I have bought and sold businesses, and lawyers advised, never buy the entity, only buy the assets.

If you buy the entity, you have no idea what the liabilities are, and any future liability from the past. There are statutes of limitation, so if someone sold you the entity, and the entity goes back some years, someone can sue for something that occurred some time before your acquisition.

Lucky for me, I bought a business from an S Corp through an LLC I formed, and the S Corp and their owners had an ongoing $3 million lawsuit against them. Had I bought the S Corp, I also bought the $3 million liability.