Smooth transition of contracts with asset purchase (buying the name)

November 03, 2024
by a searcher from Carnegie Mellon University in Boulder, CO, USA
We're asking our lawyers, but wanted to poll this community as well. Sorry for anonymous post, it's for a good reason.
We're based in Colorado and are purchasing a business in New York that operates entirely within that state. It's an asset purchase—we won't own the old LLC or its EIN—but we are acquiring the business name. All contracts are assignable, but transitioning them to our new entity/EIN will take several months. We want to minimize disruption for clients; ideally, they could continue paying the same company name, and we would gradually approach them to update the EIN.
To accommodate this, we've agreed with the current owners to continue operating as a pass-through to receive payments on our behalf, paying us as a 'management fee' equivalent to the revenue. The sellers are cooperative and supportive of whatever path best serves the customers.
We're trying to determine the best sequence for the name change process. Eventually, we want to operate under the original business name.
One option is for the current LLC to immediately change its name at closing to a placeholder name, doing business as (DBA) the original name. We would then set up a new entity under the original name as soon as it's available. This depends on New York allowing one company to DBA as another company with an agreement between them.
Another option is to leverage the fact that we're based in Colorado, where the original business name is available. We could form the company in Colorado, avoiding any duplicate names, just different states/EINs. The complexity here is that all business revenue occurs in New York, requiring us to register as a foreign entity there.
There may be other options as well. We're seeking creative solutions to ensure a smooth transition with minimal client disruption. What would you recommend?
from The University of Chicago in Chicago, IL, USA
from University of Texas in Boulder, CO, USA