If you are considering purchasing another business, it is important to know exactly what you are buying. The business may have different types of assets, from real estate where the company is physically located to existing inventory or machinery. You may also be buying intellectual property, such as patents or trademarks held by that business, which may be fundamental to operating it in the future.
To this end, one of the main advantages of buying an existing company is that you get immediate brand recognition and an existing customer base. The company already has some level of name recognition, and you are simply looking to build upon it, rather than starting from scratch. So does this mean that part of the purchase involves acquiring the company name and keeping it moving forward?
The purchase agreement
In many cases, yes, this is exactly what it means. The business name may already be officially registered with various types of intellectual property protection in place, but you can purchase that name as part of the agreement. It is simply another form of intellectual property that holds value for you as the new owner.
That said, it is very important to look at exactly how the business purchase agreement was structured. It is possible for business owners to sell their companies but retain the name. They may want to open a new company under the same name, or they may be interested in leasing the name back to you after the fact.
In other words, while it is most common to purchase the name along with the rest of the company, do not assume that this will automatically happen in every case. You need to review the paperwork and documentation carefully, and that is when it can be especially helpful to work with an experienced law firm.