Francis M. Boyer, Esq., is a member of the Bars of Florida and the District of Columbia. Mr. Boyer is also one of the few attorneys in Florida to be Board Certified by the Florida Bar as an Expert in International Law. In this interview, Mr. Boyer explains when a business owner should hire an attorney, how to avoid a lawsuit, buying and selling businesses in different countries, minimizing post-closing problems, and more.
Tina: I am located outside of the United States and would like to purchase a business within the United States. Will any business law attorney be able to help me or is there a certain type of attorney that I should look for?
Francis: No. Not every business lawyer is qualified to assist you with this type of matter. This is because some attorneys are actually more “corporate lawyers” who deal with securities issues, mergers and acquisitions, on the higher end, or merely simply perform business incorporations, on the lower end.
The perfect profile is a business lawyer for small business, which in the U.S. is defiend by the Small Business Association (SBA) as having up to 500 employees! Ideally, the attorney has a business background, either in the form of a Business degree from a university, and/or experience in dealing with asset purchases that are prevalent among small business purchases.
Tina: What should I be aware of when buying a business in a different country?
Francis: You must first recognize that even if you speak the language (you are from the U.K., Australia or Canada) and you might recognize some legal terms and practices, the actual application and understanding of these can be very different from what you are accustomed to. Never take for granted that you understand a contract, the ramifications of the clauses nor what is left out.
Tina: What should I be aware of when selling my business to someone from another counrty?
Francis: You should inquire as to whether or not the person intends to apply for a visa in order to purchase the business and if this could delay the Closing Date. As a seller, you should also inquire as to whether or not the funds are already in the U.S.
Never take for granted that you understand a contract, the ramifications of the clauses nor what is left out.
Tina: I am selling my business, at what point do you recommend hiring an attorney and what role do they play in the process?
Francis: You should hire an attorney (and a C.P.A.) prior to calling a business broker in order to make sure that your business is in a clean mode.
Tina: As a business owner preparing to sell my business, what precautions can I take to avoid being sued?
Francis: Depending on who could sue you, you certainly would not want to enter into new contracts with anyone. You would want to make sure outstanding bills are either negotiated or paid up to date and that any sales tax or IRS taxes are also handled. The last thing you want is a lien on the business that would prevent Closing.
Tina: Do I need an escrow agent to assist with the sale of my business?
Francis: Depending on the Buyer’s negotiation and the amount of the sale, it can be justified to have a third attorney as an Escrow Agent only.
Tina: Is it really necessary to receive an earnest money deposit from the buyer? If so, can you, as my attorney, hold the earnest money deposit on my behalf?
Francis: It is not legally an obligation to get a deposit, however, it is the customary practice because as a Seller, you want the Buyer to be financially invested (as well as phychologically invested). Your attorney can hold that money as a general rule, but it is a question of the terms of contract.
It is not legally an obligation to get a deposit, however, it is the customary practice because as a Seller, you want the Buyer to be financially invested (as well as phychologically invested).
Tina: Is my bank loan transferable when I sell my business?
Francis: Usually not. Bank loans would be handled at Closing with a pay-off letter indicating the exact amount to be remitted to the bank at a specific date.
Tina: I am buying a business. How do I minimize post-closing problems?
Francis: First, have a good tailor-made contract drafted. Second, conduct detailed due diligence. Third, keep some money as a hold-back from Seller.
Tina: What was the toughest problem regarding buying or selling a business that you have handled recently? Please provide an example if possible and how you represented your client.
Francis: Too many small businesses in Florida do not have proper bookkeeping. Some of them are clearly evading taxes by underreporting income. Sellers would sometime base the selling price on the unofficial income, trying to get two bites at the apple, one from the IRS, one from Buyer. Likewise, a business purchase entails a lease negotation with the Landlord. This is a three-party deal.
The last thing you want is a lien on the business that would prevent Closing.
Tina: Do you have any other tips or advice for anyone buying, selling or appraising a business?
Francis: Be truly aware what you are buying and what this is truly worth. Equipment might have some value, but remember in over 95% of the deals, you are not also purchasing the real estate, hence most of the value is not part of the business sale.