Acquiring an existing business can be the beginning of an exciting and lucrative venture. Instead of starting from scratch, the purchaser gets to step into an operational role and build on an established framework. However, before the work can begin, the buyer and seller will need to determine how the business will change hands. In Florida, an asset purchase agreement will be an essential part of this type of transaction. Here is more on creating your Florida asset purchase agreement.
What is an Asset Purchase Agreement?
When a person or entity wants to buy an existing business, they will need a legal document that provides details of the acquisition. This is a legally binding contract that will include terms related to the business and its assets. As with most business contracts, asset purchase agreements are usually complex. Consequently, it’s important that anyone developing this type of agreement work with an experienced Florida business attorney.
Creating Your Florida Asset Purchase Agreement
As you (and your attorney) negotiate the terms of your asset purchase agreement, you will be considering:
- The parties—those who are involved in the transaction.
- The timing—When the various agreement terms are expected to be completed.
- The price—How much the buyer will be paying the seller.
- The assets—what is being acquired.
- While this may seem like a straightforward detail, determining that assets involved in a business transfer can be complex.
- Business assets can include tangible property such as inventory. However, an entity’s business may also own resources such as real estate and intellectual property interests.
- You will want to work with your Florida business attorney to help ensure that all relevant assets are included in the purchase agreement.
- The exclusion—Any excluded assets.
- The warranties—Any applicable warranties.
Every asset purchase agreement is different. Therefore, most will include terms that are specific to the business and parties. For example, some parties may want to incorporate specific indemnification provisions or a non-compete agreement, while others may not require this language. An experienced business law attorney can help you evaluate your transaction and identify any essential provisions you may need to protect your interests.
Disclosure
After you and the other party negotiate the terms of your asset purchase agreement, the process will usually involve the seller disclosing specific facts to the buyer.
Seller disclosure typically includes the business’s debts and assets, financial reports, historical information, accounts receivable, existing staff and policies, active contracts, stockholders, pending litigation, permitting and licensing information, and other essential details.
The Buyer’s Evaluation
The purpose of the seller’s disclosures is to help make sure the buyer is given the information they need to evaluate the business. The seller should be able to use this information to perform their due diligence.
Once the buyer receives the seller’s disclosures and completes their due diligence, they have the option of moving forward with the purchase, renegotiating the agreement, or walking away. If everything appears to be in order, the parties will close on the transaction.
Whether you are a buyer or seller, you will want to make sure you include the right information and details in your asset purchase agreement. This crucial document will be the foundation of your transaction. Therefore, it’s essential that it is developed with the support of an experienced Florida business attorney. Your counsel can help you assess the sale, negotiate your agreement, and represent your interest throughout the process.
Contact an Experienced Florida Business Attorney
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent small business clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.