When you purchase an existing business in Florida, it is possible to leverage a proven business model with an established customer base while reducing startup time. Additionally, you will enjoy tax advantages and capital availability to expand the company as the new business owner.
In this article, you will discover the essentials involved in a Florida business purchase.
What Do You Need to Buy a Business in Florida? – Setting Up the Stage
The key document of any Florida business purchase is the purchase agreement. Depending on the terms agreed in the negotiation between the parties, the buyer may purchase the company as a whole, only the business assets, or even membership interests.
The purchase agreement outlines all the terms of the transaction, identifying the parties involved and providing a detailed description of their duties under the agreement. When drafting a purchase agreement, you must consult with an expert attorney.
An inadequate agreement may result in financial loss and stressful litigation, especially if the terms include vague or imprecise language.
What Do You Need to Buy a Business in Florida? – Payment Terms
All the information related to payment should be detailed in the contractual terms, including:
- The payment terms
- The list of assets included in the payment
- Whether the purchase includes intellectual property
- Whether the purchase includes existing contracts with service providers, vendors, etc.
- Payment protection clauses
- Whether the buyer will put down a down payment
- Whether the buyer will use financing or pay the sales amount in installments
Generally, the party purchasing the business tends to hold a deposit into an escrow account. If the buyer decides to cancel the transaction before closing, it is possible to get the deposit back.
What Do You Need to Buy a Business in Florida? – Due Diligence
The term “due diligence” refers to the process in which the buyer of a business will review the business’s history and verify whether the seller provided accurate information in the negotiation.
You should never sign a business sales contract without proceeding with due diligence first. In this process, you must work with an expert business attorney to examine the company’s records and inspect its numbers. During the process, you must analyze:
- The company’s profitability
- The physical condition of the company
- The balance between tangible and intangible assets
- The value of the company’s assets
- The company’s financial history (including tax returns, profit and loss statements, etc.)
- Whether the company has pending litigation (or ever was involved in a lawsuit)
- Whether the company has outstanding debts
- The existence of any potential risks and liabilities associated with the transaction
What Do You Need to Buy a Business in Florida? – Final Review and Closing
If the results found in the due diligence are positive, it is time to close the transaction.
An expert attorney will conduct this stage diligently, clarifying any outstanding doubts and ensuring all parties meet the established deadlines. At the closing, the parties will sign the required documentation.
As it is plain to see, a Florida business purchase is a complex, detailed-oriented process. Working with an expert attorney to guide and instruct you throughout the process will anticipate potential issues, reduce liability risks and save a significant amount of money.