Issue link: http://psai.uberflip.com/i/985928
W EEKLY EDITION MAY 23, 2018 Buying a Rental Business …continued By James Waite, reprinted with permission of the author • Are any proposed new laws going to affect the business, such as zoning changes, environmental laws, building and fire codes, use, height, noise, weight, capacity, lighting, security and/or other restrictions? • Have all taxes on the seller, the business, the real estate and the assets of the business been paid in full? • Is the seller's real estate adequate and legally compli ant? For instance, does it have wash racks? Does it contain asbestos or mold? Does it have adequate power, plumbing, heating, ventilating, air conditioning, security and right - of - way access? Is any of that likely to change in the near future? • Is the real e state subject to any liens, claims, unpaid owners' association fees, special assessments (current or proposed) and/or unpaid tax liabilities? • Will you be buying or leasing (and for how long) the real estate? • How will the purchase be financed? • What key empl oyees must you retain after buying the business? • What contracts are critical to the continued operation of the business, such as dealership agreements, software and data provision, parts and supplies, equipment maintenance and floor - planning, and can such contracts be assumed by the buyer? • Is there any litigation pending or threatened against the seller and/or the seller's business? • What, if any, insurance claims have been or will be submitted by the seller? • What licenses and permits are required, and are a ny of those which are currently maintained by the seller transferrable to the buyer? • What will the tax effects of the transaction be? This can differ substantially among transaction types and may well affect the purchase price. • How easy or difficult will i t be to integrate the seller's business with your current business? Many prospective purchasers feel uncomfortable requesting the information necessary to answer these questions, or they may simply not know what questions to ask. An attorney experienced in buying businesses will, however, know the right questions to ask and will have little problem sending a "Due Diligence List" to the prospective seller. Sellers sometimes chafe at providing the requested information, but persistence can pay big benefits — and if a seller ultimately refuses to provide it, the buyer should think carefully about whether proceeding with the acquisition is prudent. Buying an existing business can be an effective means of entering or expanding a business within the rental indu stry, but it can be nightmarish if it is not done with a great deal of care. That starts with obtaining the information about the target business necessary to make an educated decision regarding whether and how much to pay for it. The information discovere d in the "due diligence" process can be crucial and virtually always necessitates modifications to the price, the terms and the documents. James Waite is a business lawyer with more than 20 years in the equipment rental industry. He authored the American Rental Association (ARA) book on rental contracts and represents equipment lessors throughout North America on a wide range of issues, including corporate law, employment issues, negotiating and drafting rental contracts, purchase options and other rental - related agreements, as well as buying, selling and financing rental companies and their equipment. He can be reached at 866 - 582 - 2586 or j .waite@wwlegal.net . PAGE 6