• Tue, Oct 17, 2023
  • What Buyers Need to Know About Buying Businesses in Florida
  • Eba_black_logo_for_articles
  • So, you are thinking about buying a business in Florida.  This article will help prepare you for the process of buying a business.  This article will explain:

    1. What documents buyers should have available for business brokers when inquiring about businesses for sale in Florida;

    2. Why buyers must be willing to fully complete and sign an NDA for each business and cooperate with the requirements set forth by Florida law, sellers, and brokers; and

    3. How buying businesses in Florida is different from other states.


    It is important for buyers to have available the documents required by business brokers before inquiring about businesses for sale in Florida. Here are the documents buyers should have prepared:
    1. Buyers are required to provide proof of funds for businesses priced over $100,000.  The proof of funds shows the liquid funds available to purchase the business and to use as working capital to operate the business.  The proof of funds information is not shared with sellers; it is used only by brokers to qualify buyers. Typically, the proof of funds may be in any one of the following formats:

      • Personal Financial Statement or signed Source of Funds Statement often provided by brokers along with the NDA; or

      • Loan Preapproval Letter from a bank stating the amount the bank has preapproved the buyers for a business acquisition; or

      • Fiduciary Letter from a banker, CPA, investment advisor, etc., or

      • Copies of Bank Statements or Investment Statements with account numbers redacted.

    2. Buyers are required to provide information about the buyers' ownership, employment, and skill development history especially as it relates to the purchase of the specific business type or types they are inquiring about. Typically, the buyers' history may be in any one of the following formats:
       
      • Resume, or

      • CV, or

      • Link to their LinkedIn profile.



    Buyers must also be willing to fully complete and sign an NDA for each business and cooperate with the requirements set forth by Florida law, sellers, and brokers.  Here are some reasons why:

    • Buyers must provide their full name, address, phone number, and signature for an NDA to be valid in Florida.
        
    • Buyers must fully complete and sign an NDA for each business they inquire about.  In Florida, blanket NDAs do not have legal standing. Signing an NDA for one business does not translate as a signed NDA for any other business the buyers inquired about. 

    • Confidentiality is very important when selling a business.  Some sellers require brokers to run each name on an NDA by the seller prior to releasing confidential information about their business.  This helps prevent employees, competitors, vendors, etc. from finding out about the sale of the business and potentially harming the seller's business.


    Buyers must also understand how buying businesses in Florida is different from other states.  Here is how Florida is different:

    • In Florida, the majority of brokers will cooperate (co-broke) with other brokers in the sale of the businesses they have listed for sale. These brokers are typically members of the state's largest business brokers association, the Business Brokers of Florida (BBF). BBF members are required to co-broke and when bringing buyers for another broker's business listing, the broker bringing the buyers must have a fully completed and signed NDA, proof of funds, and information about the buyers' history. Without this information, the listing broker is not obligated to share any information about the business.

    • In addition, as part of the broker's agreement with the seller, the broker is often required to receive and review a fully completed and signed NDA, proof of funds, and buyers' history prior to releasing confidential information about the seller's business. If a broker does not gather this information from each buyer prior to sharing confidential information, they may be in breach of their agreement with the seller.



    In conclusion, I hope this article helped you understand 1. What documents buyers should have available for business brokers when inquiring about businesses for sale in Florida; 2. Why buyers must be willing to fully complete and sign an NDA for each business and cooperate with the requirements set forth by Florida law, sellers, and brokers; and 3. How buying businesses in Florida is different from other states.

    If you have any questions about this process of buying businesses in Florida, please do not hesitate to reach out to me. I am always happy to provide further explanation.

    Regards,
    Eric J. Gall
    239-738-6227
    [email protected]