Pub. 7 2017 Issue 1

8 AUTOMOBILE DEALER NEWS ILLINOIS www.illinoisdealers.com COUNSELOR’SCORNER BY JULIE A.CARDOSI, LAW OFFICE OF JULIE A. CARDOSI, P.C. BUYINGORSELLINGADEALERSHIP? DON’T PREPARE TO FAIL BY FAILING TO PROPERLY PREPARE T he wisdom of the words of Benjamin Franklin still holds true today: “[b]y failing to prepare, you are preparing to fail.” Too many times dealers who are eager to sell their stores or acquire additional fran- chises wait too long in the process before seeking the guidance of competent legal counsel and other professional advisors. Instead, they might attempt to negotiate terms on their own or through key dealership personnel, but without the benefit of counsel, and may end up compromising their interests. In some cases, sellers leave money on the table, or buyers pay too much for what they’re getting. In other in- stances, the transaction may not succeed. If the parties wait until the point when binding contracts are to be drawn up, they should be wary of potential problems they may create for themselves. The following considerations, among others, have proven insightful. Discussions should be documented. Prospective par- ties to a transaction commonly get together, in-person or over the telephone, to talk about their desired deal, which might include price terms and other aspects of the proposed transaction. A party should take thorough, contemporane- ous notes of these conversations. These notes should include the dates of the conversations, who participated, and as much detail as possible and be placed in a separate file that can be easily accessed. This may be helpful should the need arise down the road for clarification or in the event of a disagree- ment. Additionally, it is important to collect all necessary infor- mation and required documents at the beginning. This might include lists of inventories, existing environmental reports, property appraisals, copies of executory contracts to be as- signed and assumed, lists of any claims, pending litigation and other pertinent documentation. This information should be accessible in the early stages, ideally before negotiations oc- cur. Relegating this important aspect to sometime afterwards could cause undue delay and misunderstanding between the parties, or jeopardize a successful closing. Also, most dealerships have existing agreements, leases and even non-cancelable contracts with vendors and third