It’s never been easier to create or more profitable to buy or sell a business in Florida. The state’s pro-business environment and strong economy support all types of ventures. But knowing the steps—and potential pitfalls—along the path is key to your success.
Your first step is separating the experienced, knowledgeable business attorneys from newcomers who struggle to define the market. Moving forward with the guidance of a seasoned legal professional will prevent you from chasing dead ends and save time and money.
Steps to Purchasing or Selling a Florida Business
A well planned and executed transaction should leave both sides feeling satisfied. Knowing your role and next steps is key to a smooth transaction.
The buyer’s role involves:
- Clarifying your goals and abilities in relation to the probable growth of the business you’re considering. Does the market support the growth you need? Is the business structured for growth or does it have a fragile supply chain, challenging employee qualifications, or other limitations?
- Identifying a likely candidate for purchase and requesting preliminary financial information. A willing, cooperative, and organized business is the best candidate while something that cannot operate without daily intervention from the owner/founder is uniquely challenging.
- Letter of Intent (LOI). Crafting a strategic LOI to outline your plan, elicit more proprietary information from the seller (such as the seller providing financials) and, optimally, make contact with employees.
- Due Diligence. Gathering a crack team of professionals for this detailed exercise is a critical step. Your banker may dictate some of these processes, or the level of investigation (such as 3-5 years of financials). A complete audit of the company’s financials, verifiable lists of assets and customer orders, examination of an assumable lease for the property, polling competitors for market information and competitive pricing, and talking to customers.
- Financing. Meet with your banker to present a convincing and data-rich proposal designed to result in a green light for funding the purchase.
- Making an Offer. Your purchase and sale paperwork should reflect a reasonable price based on your research results, along with non-compete agreements from the seller, rights to the business name, and sworn documents testifying to the accuracy and veracity of leases, asset valuation, customer lists, and other information that is purchased.
The seller’s role in a business sale consists of:
- Preparing. Starting about two years before any potential sale, you must work with your CPA and others to streamline the operation and clean up records. Identify and eliminate superfluous functions.
- Hiring a broker and/or attorney. Start working with business sales professionals early. Be receptive to their suggestions for improving the cash flow and addressing any issues, such as stagnant customer growth or supply snafus. Seek out testimonials from colleagues, customers, and suppliers.
- Timing. Even if you are selling due to a prolonged downturn in your business niche, try to market your business when things look good. Also, have an elevator speech prepared to explain your reasons for selling, emphasizing positive aspects such as potential growth.
- Gathering documentation. Your business attorney will guide you through which records to compile for the buyer. Decide, with the advice of counsel, which documents can be provided under a Letter of Intent (LOI) as long as there is a Non-Disclosure (NDA) in place.
- Structuring the sale. What do you want the sale to look like from your end? Are you selling the business assets or the entire operation? Determine, with your attorney, if you’re drawing the line at certain requests. Plan to negotiate aspects of the sale, including your role and salary if the buyer requests your ongoing participation.
Finding a Qualified Attorney for Your Business Purchase or Sale
An experienced business attorney will be an asset to your business transaction, whether you’re buying or selling. Finding the right person to advise you is as easy as contacting WKFK Law for a consultation. We represent decades of business knowledge and direct experience on both sides of business purchases and sales. Call today.
