Legal Question in Business Law in Florida

Re: Asset Purchase Agreement

You would want to use a form of agreement set up specifically for a restaurant. Among the things you'll want to be sure to include are representations and warranties regarding (a) the seller's ownership of the assets themselves, (b) the lien status (one or more lenders may hold liens on them - you should order a UCC search as soon as possible), (c) the amount(s) of any debts that must be paid (often directly to the lender, rather than to the seller) in order to ensure such lien(s) is/are paid off, (d) the value and utility of such assets, as well as counts (e.g., if tables, chairs, dishracks, microwaves, flatware, glassware, dishes, etc. are included, you'll want to make certain you know how many you're getting as well as a representation that everything works), (e) the status of the building and the lease you're assuming (e.g., if the building needs a new roof and the lease obligates the tenant to replace it, you'd better know about it before you sign), (f) environmental status (e.g., vent hoods can create environmental problems, as can storage tanks and buildings constructed before 1980), (g) zoning and permitting, and many others.

It usually takes several weeks to get a business and its assets properly inspected, obtain the necessary licenses and permits, hire staff, assign contracts, etc.

Because you are effectively buying a business, you will want to first execute a Letter of Intent with the Seller that permits you to perform the necessary inspections, and go from there. Be careful, however. If the seller is bankrupt, you may hear from a bankruptcy trustee later about the possibility of taking back assets if any are purchased below market value.

One way to protect yourself against many of these issues is to pay the seller a portion of the purchase price up front and a portion over time (e.g., by use of a Promissory Note). Of course, you should never execute any of these contracts in your individual capacity, as the liability is simply too great. So set up a corporation or limited liability company to protect yourself and your assets.

These are fairly involved issues, however. You would be well-advised to retain counsel before signing anything.

Re: Asset Purchase Agreement

You would be fooish to sign a binding agreement without counsel. If you call my office and I am not in, please speak with Ravi Batta.