Buying a business in Florida can be exciting and stressful. There are a lot of details that must be carefully considered before finalizing the sale.
The majority of these fine points should be thoughtfully negotiated and put into writing in the form of a Florida asset purchase agreement.
As with any big purchase, it is extremely important to pay close attention to all aspects of the transaction.
What Is an Asset Purchase Agreement?
An asset purchase agreement is a type of contract that pertains specifically to the sale of a business or particular business assets. This complex business agreement lays out all the terms and conditions regarding the sale and is legally binding once signed by both parties.
What Does a Florida Asset Purchase Agreement Include?
In the best interests of all involved parties, the asset purchase agreement should be as detailed as reasonably possible to avoid confusion or misinterpretation. There are a number of essential elements of the asset purchase agreement which must be included.
Parties to the Agreement
First and foremost, it is important to state who is selling and who is buying. This may seem too simple to include as part of this list, but it can be critical if corporate entities with independent subdivisions are involved. It’s important to name the right entity in the agreement to avoid any ambiguity.
Purchase Price and Payment
For most business transactions, this is the defining element of the contract. The seller and buyer must agree on the purchase price. Debts and liabilities may also need to be taken into consideration during price negotiations.
The parties must agree on how and when payment will occur. Typically, the buyer delivers 5-10% of the purchase agreement price immediately after signing the agreement. This is standard, but not required.
Assets Included in the Sale
What is and isn’t a part of the transaction should be included in the agreement. Being as descriptive and detailed as possible will help reduce any potential misunderstandings.
This could include property, buildings, equipment, services, and more. These details should also match all existing business records, or the asset purchase agreement in Florida could be jeopardized.
Representations and Warranties
It is important to understand the reasons that each party is willing to enter into the contract. A “representation” is a statement of fact that is made to convince another party to enter into the contract. A “warranty” is a promise of indemnity if the representation proves to be false.
One representation may be that the product produced by the business is fit for a particular use or meets a certain standard. If that proves to be false, it can lead to termination of the asset purchase agreement in Florida and could also be grounds for litigation.
There are several things to take into consideration, depending on the type of business.
If you are a purchaser, you may want to consider adding non-compete and non-solicitation components to the Florida asset purchase agreement. This prevents the seller from essentially starting up a similar business and taking their existing clients with them.
If the purchaser is intending to keep the seller involved in the capacity of an employee, those details should also be included. This could be temporary through the transition phase or involve a permanent role.
Timeline and Finalization
The exact timeline for each party to complete their specific tasks should be laid out. Some of these things could be improvements or repairs that the seller must make before closing, delivery of payment by the buyer, or approval of the sale by any third parties or government agencies.
All other details such as minor adjustments to price or taxation and liabilities should happen before finalization.
Should You Hire A Florida Asset Purchase Agreement Attorney?
For most people, purchasing or selling a business is no small feat. There is risk on both sides of the transaction. Hiring an experienced attorney to guide you through the process and conduct a careful review of the transaction can avoid detrimental errors that you may not have noticed without their legal expertise.
The experienced team at Emmanuel Sheppard and Condon understands the complexities of Florida business transactions. Our team can help you avoid pitfalls while ensuring you are receiving everything you expect and are entitled to.
We work with large corporations and small family-owned businesses. Our diverse team of experienced legal professionals can help simplify your business and provide you with valuable peace of mind. Contact us today for your consultation.