What is the Process for Buying or Selling a Business in North Carolina?

It’s the American dream, isn’t it?

To build something from scratch. To take an idea and turn it into a real, living, breathing business that serves your community in Greensboro, High Point, or Winston-Salem.

But what happens at the end of that dream? Or at the beginning of someone else’s?

Maybe you’ve spent 30 years building a successful company, and you’re finally ready to retire. You want to sell it, protect your legacy, and take care of your family.

Or maybe you’re young, hungry, and full of ideas. You’ve found a great local business, and you’re ready to buy it and take it to the next level.

This is a huge, exciting moment. It’s also one of the most dangerous moments of your life.

We are the team at Huggins Law Firm. For years, our lawyers have sat down with folks from all over the North Carolina Triad—Greensboro, Burlington, Asheboro, Kernersville—and helped them with their most personal legal problems.

We’ve helped them with Family Law issues. We’ve helped them plan their futures with Estate Planning. We’ve stood by them during the darkest times in a Criminal Law case.

What we’ve learned is that for many of our clients, their business is not just a business.

• It’s their nest egg.
• It’s their child’s inheritance.
• It’s the biggest asset in a divorce.
• It’s their entire life’s work.

And when you’re buying or selling that life’s work, you cannot afford to “just sign the papers.” A handshake deal or a simple form you found online can cost you everything.

This guide is here to help. We’re going to walk you through the process, step-by-step, in plain English. We’ll show you the red flags, the traps, and the opportunities. We want you to feel confident and protected as you take this big step.

Why “Mergers and Acquisitions” (M&A) Talk Doesn’t Fit Small Businesses

You hear big, fancy terms on the news, like “Mergers and Acquisitions” or “M&A.” This is just Wall Street talk for buying and selling companies.

But let’s be honest. When you’re a local business owner in High Point, you’re not “merging” with a global giant. You’re selling your life’s work to a person or a local competitor.

The problem is, many of the risks are the same.

• What about the company’s hidden debts?
• What about the building’s lease?
• What about that one employee who knows all the secrets?
• What if the seller is lying about how much money the business makes?

The process for buying or selling a business is a legal maze. Our job as your lawyers is to be your guide, holding a flashlight and pointing out the traps before you fall into them.

What is the Difference Between an “Asset Sale” and a “Stock Sale”?

This is it. This is the most important question in the entire deal.

It seems simple, but it changes everything—your taxes, your risks, and your future.

Let’s imagine you want to buy “Joe’s Pizza” in Graham.

Option 1: A Stock Sale (You Buy the Whole Thing) In a “stock sale,” you are buying the entire company, or the “legal entity.” You buy all the shares of “Joe’s Pizza, Inc.”

• What you get: Everything. The pizza ovens, the name, the secret sauce recipe, and… all the “baggage.”
• The “Baggage”: You also get Joe’s $15,000 debt to his tomato supplier. You get Joe’s old tax problems. You get Joe’s unhappy employee who is about to file a lawsuit. You bought the company, so you bought all its problems—known and unknown.
• The Seller (Joe): Joe loves this. He gets one check, signs one paper, and walks away clean. All his problems are now your problems.

Option 2: An Asset Sale (You Buy the “Stuff”) This is the most common way to sell a small business in North Carolina. In an “asset sale,” you are not buying the company. You are just buying its stuff (its assets).

You create a brand new company (“NewCo Pizza, LLC”), and that new company buys:

• The pizza ovens
• The tables and chairs
• The “Joe’s Pizza” name
• The customer list
• The lease for the building

What you get: Only the things you listed in the contract.

• The “Baggage”: Joe keeps his baggage. His $15,000 debt? It’s still his problem. His old tax problems? Still his. His unhappy employee? Still his. You get to start fresh.
• The Buyer: You love this. You get all the good stuff and none of the hidden nightmares.
• The Seller (Joe): Joe doesn’t love this as much. It’s more complicated. He has to pay off his debts. And the tax man might hit him harder on this kind of sale.

Which one is best? It depends! 99% of the time, the Buyer wants an Asset Sale and the Seller wants a Stock Sale.

This is the first, biggest fight of the deal. Having a lawyer on your side who knows how to argue this, how to protect you, and how to find the best compromise is critical.

What is the Step-by-Step Process for Buying or Selling a Business in NC?

It’s not just one event. It’s a 10-step process. A good lawyer manages this process for you, so you can keep running your business.

Step 1: The “Maybe” Stage – Getting Your Team Ready

You wouldn’t climb a mountain without a guide. Don’t do this alone.

• Your Lawyer: This is us. We are the “quarterback” of the deal. We write the contracts, we find the risks, and we protect you.
• Your CPA / Accountant: Your accountant will look at the numbers. They’ll tell you what the business is really worth. They’ll also tell you how to structure the deal to save a ton of money on taxes.
• Your Business Broker (Maybe): A broker is like a real estate agent for businesses. They help you find a buyer or a seller. They are great, but they get a big commission (often 8-12%).

Step 2: The Handshake – The Letter of Intent (LOI)

You’ve found a buyer! You’ve agreed on a price! You’re excited.

So, you both sign a “Letter of Intent” (LOI). This is a short, 1-3 page letter that says, “We agree to try to make a deal.”

This is a huge trap.

People call this a “non-binding” letter. This is a myth.

The price might be non-binding. But a bad LOI can lock you into things that can kill your deal or your business.

• “No-Shop” Clause: The seller signs this, and now they are legally forbidden from talking to any other buyers for 60 or 90 days. If your deal falls apart, they’ve lost months and their business is hurting.
• “Confidentiality”: The buyer must agree to keep everything secret. What if the buyer is really your biggest competitor, and they are just using this “deal” to steal your customer list and your secret sauce?

Our lawyers fight to make this letter work for you. We make sure the “No-Shop” is short. We make the “Confidentiality” clause so strong it has real teeth.

Step 3: The “Look Under the Hood” Stage – Due Diligence

This is the most important stage for a buyer. “Due diligence” is just a fancy term for “doing your homework.”

You’ve agreed to pay $500,000 for Joe’s Pizza. Now, Joe has to prove it’s worth that much.

An experienced lawyer gives you a “due diligence checklist.” This is a list of everything we want Joe to give us.

• Financials: Three years of tax returns. Monthly bank statements. Profit & Loss statements. (This is where your CPA is your hero).
• Contracts: The building lease. The pizza oven lease. His contract with the tomato guy. We need to read every word.
• Employees: Who works here? How much are they paid? Are they a legal worker?
• Legal: Is the business being sued? Does it have all its health permits?

A “Hidden Debt” Stat You Need to Know This is something very few people talk about. In North Carolina, a business is required to have a “Bulk Sales Notice” (or comply with Article 6 of the Uniform Commercial Code) if it’s selling off its inventory.

If you don’t do this, the seller’s creditors (the people he owes money to) can come after YOU, the buyer, for the money!

We’ve seen new business owners get a letter a month after buying, saying “You owe us $50,000 for dough the last guy bought.” It’s a nightmare. A good lawyer knows these hidden laws and makes sure every “t” is crossed.

Step 4: The Monster Contract – The Purchase Agreement

This is the “big one.” This is the 30, 40, or 50-page document that has all the details of the deal.

If the LOI was the “handshake,” this is the law.

A good lawyer does not just use a template. We write a custom contract that protects you. This contract will have…

• The “What”: A list of every single asset being sold. (Yes, we will list the “pizza oven, model #1234”).
• The “How Much”: The exact price, and how it’s being paid. (Cash? A loan from the bank? Is the seller financing part of it?)
• The “What Ifs”: This is where we earn our money.
  • Reps & Warranties: This is a section where the seller swears that certain things are true. “I swear I have paid all my taxes.” “I swear no one is suing me.” “I swear the financials I gave you are 100% real.”
  • Indemnification: This is the “If you lied, you pay” clause. It says if the seller lied about anything (like a hidden tax bill), and the government comes after you, the seller has to pay for the tax bill and all your lawyer’s fees.

Step 5: The “Side Deals” – Leases and Loans

You’re not just buying a business. You’re buying a web of contracts.

• The Lease: The business is in a great spot in downtown Asheboro. But the lease ends in 6 months! And the landlord hates the new owner. You need to get the landlord to “assign” the lease to you. This is a separate negotiation, and it can kill the whole deal.
• The Bank Loan: If you’re a buyer, you are probably getting a Small Business Administration (SBA) loan. These loans are fantastic, but the paperwork is a mountain. The bank will want to see everything we are doing.

Step 6: The “Big Day” – The Closing

This is the day you sign your name 50 times and the money changes hands.

Your lawyer’s job is to run a “closing.” We make sure every single document is correct. We get the keys. We file the new company papers with the North Carolina Secretary of State. We make sure the bank wire goes through.

You get to relax and celebrate. We handle the stress.

Step 7: The “Day After” – Post-Closing

You thought you were done? Not yet.

• The seller needs to help you transition. You need the customer list. You need the passwords. You need to know how to work the special pizza oven.
• A good lawyer puts a “Transition Services Agreement” in the contract. It says the seller must stay on for 30 days to help you, for free.
• What about the seller opening a new pizza place right across the street? You need a “Non-Compete Agreement.” This is a critical contract that says the seller cannot compete with you for a certain time (like 3-5 years) in a certain area (like “within 25 miles of Greensboro”).

Why Does My Business Deal Need a Lawyer? Can’t I Do It Myself?

We know you’re smart. You’re a business owner. You know how to make deals.

But here is a hard truth: You don’t know what you don’t know.

The other side will have a lawyer. And that lawyer’s only job is to get the best deal for their client. They are not your friend. They will put in tricky language that hurts you.

We had a client come to us after he sold his business using a form he found online. It was a nightmare.

• He thought he was “done” with the business. But the buyer didn’N’t do the UCC filings right. A year later, a creditor seized the assets. The buyer sued our client, saying our client “failed to deliver a clean title.”
• He signed a non-compete that was badly written. The buyer is now suing him, saying he can’t even be a consultant for a friend in another state.

He saved $5,000 by not hiring a lawyer. He is now facing a $500,000 lawsuit.

Hiring a good lawyer isn’t an expense. It’s insurance. It’s the best insurance you will ever buy.

The Huggins Law Firm Difference: We See Your Whole Life

Here is what makes our team different.

When you come to us to sell your business, we don’t just talk about the deal. We ask the real questions.

• The Estate Planning Link: “This $500,000 check is great! But what happens now? Is this money going into your Estate Plan? Do you have a Trust set up to protect it for your kids? Or is it all going to be eaten by probate?”
• The Family Law Link: “You and your wife own this business together. Are you going through a Family Law issue, like a divorce? We must figure out how to value this business and divide it fairly before we can sell it.”
• The Bankruptcy Link: “Are you selling because you’re in financial trouble? Or are you buying a business out of bankruptcy? That’s a different, complex process. Our Bankruptcy lawyers know exactly how to do that.”
• The Personal Injury Link: “Did you get hurt in a Personal Injury accident, and now you have to sell the business you love because you can’t work? We need to make sure you’re getting both the money you deserve from the accident and the best price for your business.”

A “deal” is never just a deal. It’s about your life. It’s about your family. It’s about your future.

When you’re looking for the best business lawyer near me in the Triad, you’re looking for a team that gets this. A team that can protect you from all sides.

We are that team.

Key Takeaways: What to Remember

• Asset Sale vs. Stock Sale: This is the most important part. Buyers want to buy Assets. Sellers want to Sell Stock. A lawyer fights for the best deal for you.
• The LOI is a Trap: That “non-binding” Letter of Intent is binding. It can lock you into a bad deal or let a competitor steal your secrets.
• Due Diligence is Your Homework: This is where you look “under the hood.” A lawyer gives you the checklist to find all the hidden bombs (like old debts, tax problems, or bad contracts).
• The Contract is Your Shield: The final Purchase Agreement is a 50+ page monster. It is not a template. It is a custom shield your lawyer builds to protect you.
• Your Team is Key: You need a Lawyer (quarterback), a CPA (numbers), and maybe a Broker (matchmaker).
• It’s Not Over at Closing: You need a “Non-Compete” to protect you after the deal is done.
• A Good Lawyer is Insurance: Paying a lawyer a small fee now saves you from a 100x bigger lawsuit later.

Your Life’s Work Deserves Real Protection.

You’ve spent a lifetime building this. Don’t risk it all on a handshake or a cheap online form.

Our team at Huggins Law Firm is here to see your whole picture. We are here to protect your business, your family, and your future.

Call us. Let’s sit down for a consultation. Let’s talk about your dream and how we can help you get there safely.

Contact Huggins Law Firm Today