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Roger
Roger, Attorney
Category: Business Law
Satisfied Customers: 31687
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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When purchasing an existing business, if we assume all liability,

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When purchasing an existing business, if we assume all liability, what is the standard percentage of the sales price that should be deducted? We have heard anywhere from 2% to 10%. We live and the business in located in the state of Texas.

The percentage depends on your deductible costs, potential exposure, the amount of your insurance premium to cover these potential losses for the previous 3-5 years, and any other contingency you can agree on.

 

This is a rare occurrence as most buyers don't want to inherit liabilities of their predecessor. However, in my experience, the general deduction is 5-6%. It can be more or less depending on the actual liklihood that you will be sued for something done by the previous owner. The higher the risk, the higher the deduction.

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