Legal Question in Business Law in Maryland

Re: Cafe deposit

Your question is a good example of why you should be consulting with an experienced business law attorney and letting him/her assist you in this transaction. The attorney would prepare a purchase offer which would contain a contingency stating that the contract is subject to your approval of the seller's financial records. The seller wants you to demonstrate your seriousness and ability to purchase the business before he opens his books up to you. That's the reason for the request for the earnest money deposit. A properly prepared purchase offer will protect you in the event you decide not to go forward.

Re: Cafe deposit

I am an attorney who has 18 years of experience in handling corporate and intellectual property transactions. I frequently represent the buyers of business. I am currently representing the buyer of a beauty salon, and the buyer of a gas station. Both transactions should close this month.

I usually advise clients to go directly to the Asset Sale and Purchase Agreement. You want to buy assets, not the stock of the business. When you buy the stock, you assume the liabilities.

Regarding the financial statements that is a part of the due diligence. I would ask for the Seller's financial statements for the last 3 years, his/her Schedule C or Schedule E tax return statement for the past 3 years, all monthly credit card merchant account statements for the past 3 years, all accounts receivable and payable for the past 12 months, and the utlitiy bills. If you do not like the financials, the deal is off and the Seller must refund the $10,000. This is all provided in the due diligence section of the asset purchase agreement.

I wish you the best of luck in buying the cafe.

Re: Cafe deposit

I am an attorney who has 18 years of experience in handling corporate and intellectual property transactions. I frequently represent the buyers of business. I am currelty representing the buyer of a beauty salon, and the buyer of a gas station. Both transactions should close this month.

I usually advise clients to go directly to the Asset Sale and Purchase Agreement. You want to buy assets, not the stock of the business. When you buy the stock, you assume the liabilities.

Regarding the financial statements that is a part of the due diligence. I would ask for the Seller's financial statements for the last 3 years, his/her Schedule C or Schedule E tax return statement for the past 3 years, all monthly credit card merchant account statements for the past 3 years, all accounts receivable and payable for the past 12 months, and the utlitiy bills. If you do not like the financials, the deal is off and the Seller must refund the $10,000. This is all provided in the due diligence section of the asset purchase agreement.

I wish you the best of luck in buying the cafe.

Re: Cafe deposit

Has the owner expressed why the negotiation is to occur in this manner? It appears that the owner does not want to disclose until after a deal is made. Much of your question centers on aspects of the deal itself which you should discuss with an attorney.