Buying or selling a closely held business is often a milestone for both the owner and the family. Spiro Verras represents clients through the letter of intent, due diligence, purchase agreement, financing, and closing. He has practiced law since 1993 and drafts the agreements himself, coordinating the legal work with your CPA and other advisers so that the transaction fits your larger financial and estate plan.
Decide what is being transferred
In an asset sale, the agreement identifies the property and obligations being transferred, such as equipment, inventory, intellectual property, contracts, and goodwill. Consents may be needed for leases, contracts, or licenses. An asset sale does not automatically eliminate every potential successor liability, so applicable tax and other laws also require review. In a stock or membership-interest sale, the entity continues with its existing assets and obligations, subject to any change-of-control requirements. Spiro and your CPA can compare structure, tax allocation, and risk before the main terms are settled.
Florida’s successor-liability rules can make a buyer responsible for certain unpaid business taxes. Appropriate tax-clearance procedures, payment arrangements, or holdbacks should be considered as part of the transaction rather than assumed to be covered by the purchase agreement alone.
Start with the letter of intent
A letter of intent can leave proposed price and structure nonbinding while making confidentiality, exclusivity, or expense provisions binding. Its wording and the parties’ intent determine which obligations are enforceable. Spiro Verras would rather spend a few hours on the letter, because once the price, the structure, the non-competition term, and the seller financing are in it, they are hard to move.
Review the business before buying
The buyer reviews several years of financial statements and tax returns, every contract and lease, licenses and permits, the employee roster, pending claims, and the condition and title of the assets. Searches for recorded liens, judgments, and tax liens show who already has a claim on what is being sold. A seller does its own diligence on the buyer’s ability to pay. Much of this a client can gather without a lawyer, and Spiro Verras will say which parts.
The purchase agreement allocates the risk
The agreement states what is included, the price, and the payment terms. Representations and warranties describe the facts each party is relying on; indemnification terms address responsibility if specified problems arise. Escrows, limitations, and deadlines help allocate that risk. Confidentiality, non-solicitation, transition assistance, and any continued employment may also be important. A seller’s non-competition agreement requires separate review for enforceability under the applicable law and the interests it is intended to protect.
A seller who finances the price is a lender
When the seller accepts a note for part of the price, the seller also becomes a lender. Depending on the transaction, protections may include collateral, properly perfected security interests, guarantees, and a pledge of ownership interests. Enforcement follows the documents and applicable law; a default does not simply return the business automatically. If another lender is involved, priority and subordination terms should be understood before closing.
Prepare for a coordinated closing
A closing checklist brings together the assignments, authorizations, financing documents, lien releases, required consents, and movement of funds. Spiro identifies these steps early and coordinates them with the other participants. The signed records and any remaining post-closing obligations should be clear, including responsibility for filings, notices, transition assistance, and final adjustments.
A continuing adviser through the transition
Questions can arise during the transition and after closing. Spiro helps you understand the agreement, coordinate the next steps, and connect with appropriate counsel if a dispute requires additional representation. He can remain involved to the extent you would like. The scope and fee arrangement are explained in advance. See limited liability companies for more about entity planning and the business practice page for related services.
Contact our office to arrange a consultation with Spiro about buying or selling a business and planning for the transition. Meet in Palm Harbor, in Tampa or St. Petersburg by appointment, or by Zoom or teleconference.