Selling a business you built, or buying one you plan to run, is usually a once-in-a-career transaction. The price gets the attention, but the purchase agreement decides what you are actually buying or selling, which liabilities come along, and what happens if something turns out to be wrong after closing.
Martin represents buyers and sellers of small and mid-sized businesses in Shoreline, Seattle and across Washington, from the letter of intent through closing. He handles asset purchases, sales of stock or LLC membership interests, and the supporting documents that make the deal work.
How Martin helps
- Letters of intent that set price, structure, exclusivity and key conditions before either side spends heavily.
- Asset purchase agreements for buyers and sellers.
- Stock and membership interest purchase agreements when the entity itself is sold.
- Due diligence review of contracts, leases, licenses, employees and liabilities.
- Seller financing, including promissory notes, guarantees, and security agreements.
- Lease assignments and landlord consents, working with the commercial lease terms.
- Noncompete and transition agreements for the seller.
- Closing documents, bills of sale, assignments and post-closing checklists.
Asset sale or equity sale?
| Asset sale | Equity sale (stock or membership interests) | |
|---|---|---|
| What transfers | Selected assets and assumed liabilities. | The whole entity, with all its history. |
| Liabilities | Buyer generally takes only what it agrees to assume, subject to successor rules. | Liabilities stay with the entity, so the buyer inherits them. |
| Contracts and licenses | Often need consent to assign; some licenses must be reissued. | Usually stay in place, though change-of-control clauses may apply. |
| Taxes | Often favored by buyers for depreciation purposes. | Often favored by sellers. Your CPA should model both. |
| Paperwork | More transfer documents. | Fewer transfers, more reliance on warranties and indemnities. |
Washington issues buyers and sellers overlook
Successor liability for unpaid state taxes
Under RCW 82.32.140, a buyer of a business may become liable for the seller’s unpaid Washington excise taxes unless the buyer withholds enough of the purchase price to cover them, or receives a receipt from the Department of Revenue showing the taxes are paid or a certificate that no tax is due. Buyers should build this step into the closing timeline, and sellers should expect it.
Unemployment tax, workers’ comp and licenses
The Employment Security Department may transfer a seller’s unemployment tax history to a buyer that takes over the business, and Labor & Industries has its own rules for workers’ compensation accounts. Business licenses and endorsements generally do not transfer automatically in an asset sale, and regulated businesses such as those with liquor licenses need agency approval before the new owner operates.
Noncompetes from the seller
Washington’s noncompete statute, chapter 49.62 RCW, sharply limits employee noncompetes and a broader ban takes effect June 30, 2027. It keeps an exception for noncompetes given by a person who sells an ownership interest of 1 percent or more in the business. A buyer paying for goodwill should make sure the seller’s restriction is drafted to fit that exception.
Warranties, indemnities and limits
Representations and warranties allocate risk for facts neither side can fully verify. How long they survive, the thresholds before claims can be made, and the caps on recovery are heavily negotiated. Martin has written about survival periods and no-recourse deals and baskets and caps on his blog.
How it works
- Consultation. The deal, the timeline, the other side’s advisors, and your priorities.
- Letter of intent. Martin drafts or reviews the LOI so the major terms are settled early.
- Due diligence. Document requests and review, with a list of issues to address in the agreement or at closing.
- Negotiation and drafting. The purchase agreement, disclosure schedules and ancillary documents.
- Closing and follow-up. Signatures, funds flow, state tax clearance, license transfers and post-closing obligations.
Selling to a co-owner instead of an outside buyer? A buy-sell agreement may already control the terms. For the customer and vendor contracts you are assigning, Martin can review them for consent requirements.
Frequently asked questions
Do I need a lawyer to sell my small business?
It is strongly recommended. Brokers find buyers and help set price, but the purchase agreement decides your liability after closing, how and when you get paid, and what promises you make about the business. Having your own attorney review those terms protects the value you worked to build.
What is the difference between an asset sale and a stock sale?
In an asset sale, the buyer purchases specific assets and assumes only the liabilities it agrees to. In a stock or membership interest sale, the buyer acquires the entity itself, including its history and liabilities. Each structure has different tax, consent and risk consequences for buyer and seller.
What is a letter of intent, and is it binding?
A letter of intent outlines the main deal terms, such as price, structure and timing, before the full agreement is drafted. Most business terms in an LOI are non-binding, but provisions such as confidentiality and exclusivity are often binding. The LOI should say clearly which parts bind the parties.
Can a buyer be liable for the seller’s unpaid Washington taxes?
Yes. Under RCW 82.32.140, a buyer may become liable for the seller’s unpaid excise taxes unless it withholds enough of the price or obtains proof from the Department of Revenue that the taxes are paid or that none are due. This should be handled before closing.
Can I require the seller not to compete after the sale?
Generally yes. Washington’s noncompete statute keeps an exception for noncompetes connected to the sale of an ownership interest in a business. The restriction should be reasonable in time, geography and scope, and drafted as part of the sale rather than as an employment term.
How long does it take to buy or sell a business?
Small business transactions often take 60 to 120 days from a signed letter of intent to closing. Financing, landlord consents, license approvals and due diligence issues are the usual sources of delay. Starting those items early keeps the timeline realistic.
What happens to employees when a business is sold?
In an asset sale, the seller typically terminates employees and the buyer rehires the ones it wants, so final pay and benefits must be handled correctly. In an equity sale, employees generally stay employed by the same entity. Either way, the agreement should address how employee matters are handled.
Get counsel before you sign the LOI
The letter of intent shapes everything that follows. Talk with Martin before you sign one.
Direct line: 206-929-0609
Office: 17503 Tenth Ave NE, Shoreline, WA 98155
You can also read client reviews on Avvo and on Google.
See the full list of services Martin Kreshon provides for Washington businesses.