A transfer of business occurs any time a business activity or business asset is transferred outside of the normal course of doing business.

The usual way that a business is transferred is through a sale, lease, reorganization, merger or consolidation. However, a business can also be transferred through foreclosures, inheritances and bankruptcy.

The business transfer spectrum depicts the various transfer alternatives. Transfer channels represent the highest level of choice for private owners. Owner motives are the basis for selecting transfer channels. Transfer methods, the actual techniques used to transfer a business interest, are grouped under transfer channels.

An owner has seven transfer channels from which to choose. The channels are: Employees; Charitable trusts; Family; Co-owners; Outside - retire; Outside - continue; and, Going public. The choice of channel is manifested by the owner's motives and goals. For instance, owners wishing to transfer the business to children choose the Family transfer channel. Owners who desire to transfer the business to an outsider then retire choose the Outside - retire channel, and so on.

Many a small business person has spent years building a business from scratch, injecting fresh capital when needed and investing new sweat equity daily in order to someday establish a profitable business operation with valuable assets, cash flow and goodwill. For many entrepreneurs, the payoff is the ability to sell that business and either retire or start a new business with the fruits of his or her labors. These rewards come at the expense of a buyer, typically a first-time entrepreneur investing either substantial borrowed funds or the bulk of his or her life savings. For both seller and buyer, the stakes could not be higher.

The transfer of a business or business assets cannot be accomplished without appropriate written contracts, where small oversights in drafting can make the difference between protecting one’s investment and losing everything. It is therefore unthinkable that either a buyer or seller would enter into the transaction of a lifetime without proper counseling.