If you want to sell a business, do you have to sell the name with it?

Question

We have a small repair machinery business. we want to move interstate and build up again. Hubby wants to sell the Vic state business. I don't want to sell the name. I want the same name if we start again elsewhere. Is this right? Should we just sell everything and name a new company when we do decide to do it again?

Answer 1

If the business is incorporated, the name goes with the company. An alternative in that case would be to sell the assets of the company, including any client lists. Let the new owners decide what to name their new business while you move the corporation to another location.

If it is a sole proprietorship, you just need to put in the sales contract that the name is not included as part of the sale. You retain rights to the name while the new owner takes over the business.

In either case, you will probably lose some of the sales price. Part of the incentive of buying an existing business is the fact that customers already know and trust the name, aka goodwill. When the new owner has to give the business a new name, as far as existing clients are concerned, they might as well be starting a new business.

Answer 2

The response from "emucorp" is correct. If the name has some market value, the purchaser is likely to want to retain it after purchase. They may even go so far as to prevent you from using the name (or a similar name) within a given geographical area for a given period following the sale. This is a common (and reasonable) restriction sought by purchasers to protect the business they have just purchased. These terms are agreed as part of the sale process and will vary from transaction to transaction depending on the nature of the business.

Answer 3

You can insist they change the name within a time period. You can have a business with the same name in another state names are state specific.
I was doing the accounting for a company named Commercial Plastics and one from another state moved in and tried to use the name but ours had the name licensed here so the other company couldn't.

Answer 4

Generally the purchaser will want to keep the name - it has 'Goodwill' attached to it. They may also stipulate that you can't start a new business within a certain timeframe or distance (if applicable) of the original business. You should make sure that you understand the value of the name to the business (reputation etc) but also realise that if you don't sell the name it might be less valuable to the buyer.

Its your choice but its likely to affect the sale price of the business.

Answer 5

I agree with the other answers, and id let the new buyers use the original name.A new start with a new name would be the best strategy