Concerns about merging our business with another

[Art87]

Hello everyone, my name is Anne. I just joined small business forum today. I thought of joining this community in order to seek out advice, thoughts or insights. It is actually my husband who owns the business and I am working for him. He has this guy he met less than a year ago who has the same business as his. He encouraged my husband to share his space and split the rent, (we sublease to him). Four months later, he said he already wanted to retire and he said he will just give his business to my husband. His business however has been slow the past four months. And he had been having problem collecting from his clients... I just don't feel excited about this transfer of business thing, what are we suppose to be aware of in order to take on his business even if he doesn't ask money from us? Hope anyone here can give me advise.. would truly appreciate it.

[Fulcrum]

The biggest thing would be to make sure that you and your husband will not be held liable for any outstanding monies (loans, liens, etc.). For the actual transfer, do an asset sale for $1. That way your paper work will be in, somewhat, good order.

[WarrenD]

Have you had a look at his Financial statements - Balance sheet, profit and loss accounts? Taking over a business means taking over its assets AND liabilities. If he has higher liabilities than assets then your husband's business will inherit those & be responsible for paying them off! So don't get into anything without conducting due diligence first. Hire a professional accountant if you need to.

[cbscreative]

You also want to consider the compatibility of the two businesses. How well do your business procedures mesh with his? Will his clients be attracted to your business model? Do you even want his clients? You can be in the same business but that doesn't mean anything.

For example, I do web design. I provide web design from a radically different approach than the majority of web designers. I would be very apprehensive if another web designer wanted me to take over his clients. I would have a lot of questions before agreeing to any such offer.