Can I advertise a business for sale ? (In NJ)

December 1, 2008 8:43 PM

Legal/finance filter: Is it ok to advertise a business or investment for sale? So let's say I have a great business idea or investment idea or an actual business - and I want to sell part of it. Or garner investors. Can I just place ads (in papers or in direct mailings) asking for investors? Or am I bound by stacks of tricky SEC rules and Fed/State investment rules ?

I'm in New Jersey, USA. Maybe this is two questions:

1. Let's say I have a great business idea and I need $100,000 to start it off. Can I place an ad in the local paper that says "Ten $10,000 investors needed for great business idea. Email [e-mail] for more details"

or

2. I have an existing business and I want to sell a third of it. Can I place an ad that says "33% of great local business for sale, $50,000 ono. Email [e-mail] for more info"

Do I have to comply with some awful securities regulations or investment disclosures etc. ? And if so, which ones? And if I can't do this directly, who can? Business brokers ? Real estate agents? CPAs?

Help please?


ps: I have this great business idea ... (just kidding!!)

posted by Xhris to law & government (3 comments total)

Er... not really sure what advice you're asking here. What sort of business is this? I mean, how developed is this terrific business idea? Could you take your business plan, market research, your own CV, etc in to a bank to secure a loan? Or is it still in the ether?

If it is the former, you'd be OK advertising for investors however you can. I don't think you'd be terribly successful with a newspaper ad, but crazier things have happened. It depends on what sort of investor you want. Are you looking for money, or experience, or contacts, or all of the above?

If you're still at the point where you're kicking around a vague idea of your business with a partner over a bottle of wine, then you're in murkier waters. Namely, how can you get seed money for your idea to develop it without possibly being charged with fraud. The more you have a business plan together - a real one - then you're not only more likely to actually succeed, but to get investment to do it.

If you have an actual business and want to sell it, there is nothing stopping you from advertising that fact. Most people choose to not give the name of their company when they do so because they don't want to compromise the perceived or actual strength of their business. There are sites devoted to buying and selling businesses - I've seen a few recently that are specifically for pubs or for printworks. If you have an actual, operational business you want to sell, talk to your CPA or your lawyer and ask if they can point you in any directions. People know people, they tend to talk to business lawyers and CPAs about money stuff, and you aren't their only client.

Not sure if this is helpful, as your question was so open...
posted by Grrlscout at 3:23 AM on December 2, 2008

For 1, see "blue sky laws" at Wikipedia and elsewhere. Business ideas and investment prospects are better promoted using local incubators or business advisors/promoters, referred to as BIDCO in many locations.
For 2, yes, you can.
posted by yclipse at 4:24 AM on December 2, 2008

What securities do you think you're offering in either of these situations?

So, if I'm understanding you, in scenario one you are just a crazy guy with an ad in the newspaper who nobody with a spare $10,000 dollars is going to call, right? There's no corporate entity doing this, just you asking for money so you can do something? Knock your hypothetical self out. I'm not really sure of any law that would prohibit you from wandering the streets asking for strangers to buy you, I dunno, an ice cream truck that you would operate and give them a share of the money. Which is basically the same thing with, let's be real, roughly the same chance of success.

Blue sky laws apply to securities, not requests to contract.

As to your second question . . . you know there are a ton of unknowns here, right? Important unknowns. Unknowns that need to be un-unknown..ed before you could get any kind of a reasonable answer. So, that's an issue. Here's a bigger one:

Do I have to comply with some awful securities regulations or investment disclosures etc. ? And if so, which ones?

You should really know better than to ask this.

If what you really want to know is whether somebody could use the newspaper to try to get another person to share a chunk of a lawn mowing business they do on the side, then yeah, it's probably fine. If you own 99% of a publicly traded company, and you want to sell a third of your shares, it's a different story.

In either case, making material misrepresentations or omitting material is fraud, whether securities are involved or not, as far as disclosures go. If actual securities are involved, things get a lot more complicated than not lying to your potential landscaping partner about how many lawnmowers you owe.
posted by averyoldworld at 11:50 AM on December 2, 2008