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How to Structure The Sale and Purchase of a Restaurant

 Posted on March 29, 2023 in Real Estate

"KendallYorkville Sale of Restaurant Attorney: Structuring The Commercial Purchase or Sale of a Restaurant in Kendall County

Structuring a purchase of a restaurant when you are purchasing the building and the business requires careful planning and consideration. There are two significant steps in the commercial purchase and sale process, along with legal concerns for the commercial real estate purchase of the building. The first step is negotiating a letter of intent. 

A letter of intent is a non-legally binding letter that summarizes the terms and conditions of the restaurant purchase. The purpose of a letter of intent is to describe the potential acquisition of the restaurant and commercial building and show a seller that the buyer is serious. Furthermore, the letter of intent secures the exclusive negotiations involving the proposed buyer and the seller. The letter of intent must summarize the rights and responsibilities of the buyer and seller. The letter of intent also will have an initial deposit of money that will be exchanged called "earnest money." The earnest money shows the buyer's seriousness in purchasing the business. 

A commercial purchase and sale contract for the real estate purchase will evidence the commercial real estate purchase. The letter of intent is supplemental to the commercial purchase and sale contract for acquiring the commercial real estate property. Generally, a commercial real estate agent and a business broker represent the sale and purchase of a commercial real estate property. For example, the commercial real estate agent is authorized to sell real estate and place a restaurant's building up for sale. The business broker is experienced in executing the purchase and sale of a restaurant. The business broker identifies potential buyers and sellers and brings them together.

Structure of the Sale of the Building

Buyers generally will purchase the building where the restaurant is located by paying cash or acquiring bank or commercial financing. Most business attorneys will structure the purchase of a commercial building as a limited liability company or otherwise known as an "LLC." Typically, the structure of the business sale involves an LLC, and the restaurant purchase should apply to a separate LLC. Purchasing two LLCs minimizes a buyer's liability concerns, and the building LLC will lease the property to the restaurant LLC. Often, the building purchase may involve investors and multiple persons. The purchase of commercial real estate is a solid investment in itself. The restaurant purchase is beneficial because the restaurant will lease the premises from the building LLC.

Hiring a business attorney coupled with a commercial real estate attorney is essential. The two transactions are separate but interrelated. Real estate law is a different skill from the business law side. The business transaction experience requires a substantial tax and business background and knowledge of the various business entities such as LLCs, Corporations, and Partnerships.

Asset Purchase Agreement

An Asset Purchase Agreement is generally how a restaurant sale or purchase is structured. An Asset Purchase Agreement is a written legal agreement summarizing the rights and responsibilities of the commercial purchase and sale transaction. The Asset Purchase Agreement should describe the parties involved, the purchase price, the financing terms, and any other relevant details involving the purchase and sale transaction. 

In many restaurant purchases and sales, the commercial real estate acquisition and the closing will coincide (or back to back). 

Kendall County Sale of Restaurant Attorney and Commercial Real Estate Lawyer

Sean Robertson and Gateville Law Firm are experienced commercial real estate attorneys and business attorneys eager to assist purchasers and sellers of restaurants. Our attorneys and support staff are highly experienced in real estate transactions and have experience purchasing and selling a business. The combined expertise is critical. In addition, Sean Robertson has a substantial tax, business, and estate planning background, which is vital in purchasing and selling a restaurant and acquiring a commercial building. Reach out to us at 630-780-1034 or via our online contact sheet.

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