Legal Question in Real Estate Law in Michigan

Run, don't walk away. www.kliszlaw.com. Tim Klisz

The principal consideration here is whether you are buying the business (in other words, taking ownership of someone else's company) or you are buying the assets (that is, the physical items which enable you to run a restaurant in a new company which you create).

If you intend to take over or purchase the seller's company, then the seller's disclosure of all books and records of the company should be a non-negotiable requirement. An independent CPA, hired by you and faithful only to you, should review the books and records and advise you as to whether they appear accurate and whether the business appears to be in any financial or tax trouble. After that, unless you know the restaurant business yourself, you should consult with someone who is experienced in operating a successful restaurant. Obviously, none of this may be accomplished if the seller is refusing to disclose anything more than the tax returns.

If you intend only to purchase the physical assets of the company and possibly to take over the seller's lease or land, then the books and records of the business, while still relevant, are less of a concern. Still, you must be certain to have an experienced attorney conduct a due diligence search of all relevant issues, such as tax liens, outstanding lawsuits or judgments, security statements and liens, and other problems which might attach to the assets or the location.

In any event, you must retain an experienced attorney who has represented clients in such transactions, especially with respect to restaurants and, if relevant, liquor licenses. You should do this before you negotiate or sign anything with the prospective seller.

This response may not be relied upon as legal advice and it is not intended to be legal advice. Your rights and obligations will depend upon the particular facts and circumstances affecting this matter. You should consult an attorney in your area to discuss all of the relevant facts and circumstances. No attorney/client relationship is created as a result of this response. I may be contacted at 248.788.8225, to discuss this or other legal matters.