Publication1 2021 Issue 1

29 KENTUCKY AUTO DEALER agreements and all addenda, lists of inventories, customer records, existing environmental reports, appraisals, records of pending litigation and the like. A seller should compile this information before any negotiations occur. Relegating this important aspect to the end often causes undue delay, misunderstandings between the parties and can even jeopardize a closing. Third, most dealerships have executory contracts, existing agreements, leases, and even non-cancelable contracts with vendors and third parties (e.g., computer equipment/software maintenance contracts, agreements for uniforms, advertising, etc.). It is important that these agreements be identified and reviewed early on in the buy-sell process to allow the parties to determine if they are being assumed by the buyer and to determine any assignment requirements. Failure to identify and address these obligations can prove costly and adversely impact the buy-sell closing. Fourth, the parties should evaluate how to address any due diligence inspections of the business, records, assets and any real estate and improvements, including who will bear inspection costs and the consequence of inspection findings that are not satisfactory. Early determination of these issues could facilitate avoidance of delay, keep the deal together, or allow a party to determine whether to proceed to closing. Fifth, the structure of the selling dealership is often a corporation or other legal entity. Though the buyer may have been dealing with the seller’s majority owner all along, minority shareholders may have rights under the law and the corporation’s governing documents which can impact the buy-sell process. Determine early in the process the rights, if any, of minority shareholders to avoid unnecessary delay and secure required approvals. Given the prospect of an uptick of buy-sell activity, dealers considering either buying or selling should retain competent legal counsel as early as possible prior to commencing this process. Before principals participate in discussions about a prospective deal with interested parties or take other affirmative steps, consideration of the above five points, consultation with counsel and other advisors to address specific circumstances will serve to avoid pitfalls that could adversely result in the undoing of the coveted deal, prove costly to the parties, or impact the parties’ legal rights and protections. Julie A. Cardosi is an attorney and president of the private firm, Law Office of Julie A. Cardosi, P.C., of Springfield, Illinois. She has practiced law for 35 years and represents the business interests of franchised new vehicle dealers. Formerly in-house legal counsel for IADA, she concentrates her practice in the areas of mergers and acquisitions and other transfers of dealer ownership, franchise law, commercial law, state and federal regulatory compliance matters, including employment, and other areas impacting day- to-day dealership business operations. She has also served as former Illinois Assistant Attorney General and Deputy Chief of the Consumer Fraud Bureau of the Attorney General’s Office. The material discussed in this article is for general information only and is not intended as legal advice and should not be acted upon as such. Dealers should consult their own private legal counsel for application to their specific circumstances. For more information, Julie can be reached at jcardosi@autocounsel.com , or at 217-787-9782, ext. 1. ONE LAST THING ... Did you know that you can enjoy your association news anytime, anywhere? Scan the QR code or visit: kentucky-auto-dealer.thenewslinkgroup.org/ Check it out! The new online article build-outs allow you to: • Stay up to date with the latest association news • Share your favorite articles to social channels • Email articles to friends or colleagues There is still a flipping book for those of you who prefer swiping and a downloadable PDF.