Business Acquisitions

Looking to buy or sell a Florida business? This can be quite the exciting experience, nevertheless managing the paperwork and details involved may feel daunting.

When contemplating strategic transactions, our team of attorneys at Rak Law Firm understand the process and can help you along the way as you pursue your business goals. A business acquisition, or takeover, done wrong can be fatal to your business. Our attorneys are dedicated to achieving client success by delivering creative solutions.

Buying a Business in Florida

If you want to start a business, you typically have two options:

1. Open a new business from scratch or
2. Buy an existing business.

A business purchase is different from a business franchise. 16 CFR Part 437.

• A business opportunity does not necessarily require the buyer or lessee to operate the business under a common brand or operating system.
• A business opportunity does not involve the license of or material association with the seller’s or lessor’s trademark.
• A business opportunity does not require the seller or lessor to provide ongoing support to the buyer or lessee in connection with operating the applicable business.
• The buyer or lessee is not generally required to provide the seller or lessor with ongoing fees.
• The legal disclosure requirements are vastly different for business opportunities compared to that of franchise agreements.

The process for purchasing a business may include the following:

1. Letter of Intent (LOI): is a written expression, contract or agreement of essential terms of a proposed transaction that is generally signed by parties involved.
2. Asset Purchase Agreement (APA): an agreement between buyer and seller that formalizes the purchase of a business or business asset.
3. Legal Due Diligence (LDD): review, analysis and assessment of any legal risks, liabilities and potential solutions to same.
4. Closing: typically the conclusion of the agreement and transaction, where the terms of the transaction have been drafted, financing is secured, and the parties schedule the closing of the asset purchase agreement. During the closing, the buyer may deliver the agreed upon funds to the seller and the seller may provide the necessary documents and information such as any keys to the property.

What Is a Business Acquisition?

A business acquisition is a transaction where one business purchases another business.

The term “acquisition” includes: a tender offer or exchange offer for securities, assets, or other ownership interest; a merger of a person or affiliated person into a specialty insurer or a merger of any person with a specialty insurer; Fla. Stat. §628.4615.

What Is The Difference Between a Merger and an Acquisition?

• Merger: occurs when two separate businesses or entities combine to create a new, joint entity.
• Acquisition: occurs when one business purchases another outright. No new entity is formed.

Types of Acquisitions

1. Horizontal Acquisition: occur when a company merges or takes over another that offers the same or similar products and services. Typically they are the same industry and the same stage of production. Usually these companies are direct competitors within the industry.
2. Vertical Acquisition: occur when two companies merge that offer the same service or products, like horizontal acquisitions; however, the stage of production is different. These acquisitions are usually undertaken to assume the supply of goods and avoid disrupting the supply.
3. Concentric Acquisitions: occur between firms that serve similar customers in one industry, like horizontal and vertical acquisitions; however they do not offer the same goods and services. These are often pursued to facilitate selling different products and by doing so they diversify their company, thus producing higher profits.

Should I Hire an Attorney for My Buisness Acquisition?

It is highly recommended that you seek legal counsel regarding your business acquisition. This process can be complex and in order to ensure legal compliance and asset protection, you should hire an attorney for acquisition assistance.

Elements of Business Acquisition

Elements of business acquisition typically include:

1. A business opportunity
2. That the corporation is financially capable of undertaking
3. This opportunity fit into the present activities of the corporation or into an established corporate policy that acquisition of the opportunity would forward.

Uvanile v. Denoff, 495 So. 2d 1177 (Fla. Dist. Ct. App. 1986) (citing Farber v. Servan Land Co., 662 F.2d 371, 377 (5th Cir. 1981).

Steps to a Successful Business Acquisition

1. Consult an attorney: prior to starting your acquisition or buying a business it is advisable to set up the appropriate legal structure for owning a business. This can help reduce liability. Our team of attorneys here at Rak Law can use their business acquisition knowledge and experience to lead clients in a successful acquisition portfolio process.
2. Speak with an accountant: getting your financial “ducks” in a row can help clarify any tax implications of the legal structure and the allocation of the business purchase price. The accountant may also assist in the registration of an Employer ID Number (EIN).
3. Select a business trade name: determine if you need to register your business name with a Florida fictitious name filing.
4. Open a commercial bank account: for any operating and/or payroll accounts.
5. Apply for a Department of Revenue Sales Tax License
6. Local business registration: call city and county government offices to see if they require a local business tax certificate.
7. State business registration and licensing: depending on the type of business, you may need to apply for a license with the Florida Department of Business and Professional Regulation 8.         Research insurance: you may want to gather business or property insurance.