Selling a business can be an exciting time, but there are a lot of details to consider to wrap up a business deal. Usually the owner is thinking more about the money involved or about the overall exit strategy. However, there is one area that is usually either the last thing on their mind or maybe not even on the owner's radar in the first place. That's the liability an owner may have after the sale.
Depending on the legal entity of your company while in business, you may still be exposed to liabilities for work your business performed years before you leave. If products or services purchased from your company prior to the sale were proven defective or failed, you could still be liable. Your personal assets, either as a sole proprietor or as a partner, could end up being completely exposed even after the business sells or closes.
In many cases, having your business registered as a Corporation, an S Corp or a Limited Liability Corporation could provide some protection. But to make sure you are fully protected, you may want to consider a few insurance strategies. For example, you could renew your existing business liability policy for an extended time. Another strategy is you could purchase a specialty "discontinued products or operations" policy. Or you could seek to have the buyer include you in their current policy.
If you are thinking of selling your business or if you are in the process of selling, make sure you have your J.P. Perry insurance agent review the details of the deal in order to evaluate your potential liability after the sale.