M&A Conditions Precedent Checklist - Florida

M&A CONDITIONS PRECEDENT CHECKLIST

State of Florida

Transaction Name: [________________________________]
Transaction Type: ☐ Stock Purchase ☐ Asset Purchase ☐ Statutory Merger ☐ Share Exchange ☐ Other: [________________________________]
Seller/Target: [________________________________]
Buyer/Acquirer: [________________________________]
Anticipated Closing Date: [__/__/____]
Definitive Agreement Date: [__/__/____]
Outside Date (Drop-Dead Date): [__/__/____]
Deal Counsel (Seller): [________________________________]
Deal Counsel (Buyer): [________________________________]

STATUS KEY:

• NS = Not Started
• IP = In Progress
• PC = Pending Counterparty
• PR = Pending Regulatory
• C = Complete
• W = Waived
• NA = Not Applicable

PART I: PRE-CLOSING CONDITIONS

A. Regulatory Approvals

B. Third-Party Consents

C. Stockholder/Member Approvals

PART II: SELLER'S CONDITIONS TO CLOSING (Conditions for Seller's Benefit)

A. Representations and Warranties Bring-Down

B. Buyer's Covenants Performed

C. Other Seller Conditions

PART III: BUYER'S CONDITIONS TO CLOSING (Conditions for Buyer's Benefit)

A. Representations and Warranties Bring-Down

B. Seller's Covenants Performed

C. No Material Adverse Change (MAC/MAE)

D. Legal Opinions

E. Financial and Diligence Conditions

F. Employee and Benefits Conditions

G. Insurance / RWI Conditions (if Applicable)

PART IV: MUTUAL CONDITIONS TO CLOSING

PART V: FLORIDA-SPECIFIC REQUIREMENTS

A. State Merger Filings (Statutory Merger Transactions)

B. Florida Good Standing and Entity Status

C. Florida Tax Matters

D. Florida-Specific Licensing and Permits

E. Bulk Sales Considerations

PART VI: CLOSING DELIVERABLES CHECKLIST

A. Seller's Closing Deliverables

B. Buyer's Closing Deliverables

C. Funds Flow and Payment

PART VII: POST-CLOSING CONDITIONS AND OBLIGATIONS

PART VIII: PRACTICE NOTES -- FLORIDA-SPECIFIC

Key Florida Considerations

1. Filing Office: Florida merger filings go to the Florida Department of State, Division of Corporations (Sunbiz), located in Tallahassee. Online filing is available at sunbiz.org, which is generally faster than paper filing.

2. Recent Statutory Updates: Florida's Business Corporation Act (Ch. 607) was substantially revised effective January 1, 2020, adopting many provisions of the Model Business Corporation Act. Ensure you are working from the current statute.

3. Shareholder Approval: Under Fla. Stat. 607.1103, approval requires a majority of votes entitled to be cast by each voting group. Review articles for any supermajority provisions.

4. Short-Form Merger: Under Fla. Stat. 607.1104, a parent owning at least 80% of each class of a subsidiary may merge without subsidiary shareholder approval. Note: some states use 90%, but Florida uses 80%.

5. Appraisal Rights: Fla. Stat. §§ 607.1301–607.1340 govern appraisal rights. Under § 607.1302(2)(a), the market-out rule covers specified federal covered securities. For shares that are not covered securities, § 607.1302(2)(a)2. requires trading in an organized market or comparable process, at least 2,000 shareholders, and at least $20 million in market value of the class or series after the statute's specified exclusions. Check the transaction and the exceptions in § 607.1302(2)(c) before treating appraisal rights as unavailable.

6. Tax Clearance by Transaction Type: Florida does not impose a universal DOR clearance step before filing merger or dissolution documents. For a covered asset transfer, § 213.758 provides specific transferee-liability exceptions, including a DOR receipt or certificate of compliance with no insiders in common, or a qualifying DOR audit finding. A general account-status letter alone does not establish either exception.

7. Bulk Transfers and Tax: Chapter 93-77 repealed Florida's UCC Article 6 bulk-transfer chapter. In an asset deal, separately screen for transferee liability for the seller's unpaid tax under Fla. Stat. § 213.758; the repeal does not eliminate that separate tax rule.

8. Documentary Stamp and Intangible Taxes: Florida's documentary stamp tax on taxable notes and recorded mortgages is $0.35 per $100 or fraction under Fla. Stat. § 201.08. The separate one-time intangible tax on an obligation secured by Florida real property is 2 mills ($0.20 per $100) under § 199.133. Check any deed-transfer tax separately under § 201.02.

9. No State Income Tax (Individuals): Florida has no personal income tax, but it imposes a 5.5% corporate income tax on C corporations (Fla. Stat. Ch. 220). LLCs, S corps, and partnerships are generally not subject to Florida income tax at the entity level. Factor this into structuring.

10. Non-Competition Agreements: Under Fla. Stat. § 542.335(1)(d), six months or less is presumed reasonable and more than two years presumed unreasonable for former employees, agents, and independent contractors outside a business sale. For a seller of a business or equity interest, three years or less is presumed reasonable and more than seven years presumed unreasonable. Each presumption is rebuttable. The CHOICE Act, §§ 542.43–.45, has separate rules for qualifying covered employees and contractors, including covered noncompetes of up to four years and covered garden-leave agreements. Check earnings, location, notice, and the other statutory conditions before using that route.

11. Tangible Personal Property Tax: Florida counties impose ad valorem tax on tangible personal property (equipment, furniture, fixtures). Ensure this is current and that returns have been filed.

12. AHCA Healthcare Licensing: Changes of ownership in healthcare facilities require a new license application with the Agency for Health Care Administration. This can take significant time and should be started early.

Common Pitfalls

• Not accounting for Florida documentary stamp tax on real property (substantial amounts on large deals)
• Overlooking tangible personal property tax obligations at the county level
• Failing to document a § 213.758 exception or an informed risk-allocation plan in a covered asset purchase
• Not filing AHCA change-of-ownership notice and license application at least 60 days before the anticipated change
• Missing annual report deadline (May 1) which can trigger administrative dissolution
• Using 90% threshold for short-form merger when Florida uses 80%
• Forgetting to withdraw foreign entity qualification after merger (if disappearing entity was foreign-qualified)
• Not addressing county-level tangible personal property tax return obligations

RWI and Insurance Considerations

• D&O tail policies should be bound at or before closing. Typical tail period is 6 years.
• Confirm RWI policy covers Florida-specific representations, particularly regarding environmental matters (Florida has significant Superfund and contamination concerns) and homestead/real property issues.
• Florida workers' compensation insurance must be confirmed for post-closing operations.
• For transactions involving significant real property, coordinate documentary stamp tax calculations early to avoid closing delays.

Timing and Scheduling Notes

• Florida Division of Corporations (Sunbiz) processes online filings faster than paper filings; standard processing is approximately 5-7 business days
• Annual report deadline is May 1 each year; if the report is not delivered by the third Friday in September, dissolution or revocation for that delinquency occurs at the close of business on the fourth Friday under the applicable entity statute
• HSR filing (if applicable): ordinarily 30 days after FTC/DOJ receipt of both required notifications; 15 days for a cash tender offer after receipt of the acquiring person's notification, subject to statutory extensions
• AHCA change-of-ownership filings are due at least 60 days before the anticipated change; allow time for agency review
• Dissenter's rights demand period must be factored into the timeline
• Documentary stamp tax is due at time of recording real property transfer documents

SOURCES AND REFERENCES

• Florida Business Corporation Act: Fla. Stat. Ch. 607
• Florida Articles of Merger Requirements: Fla. Stat. 607.1105
• Florida Division of Corporations (Sunbiz): sunbiz.org
• Florida Division of Corporations Fees: dos.fl.gov
• Florida Documentary Stamp Tax: Fla. Stat. 201.02
• Florida Non-Competition Agreements: Fla. Stat. 542.335
• Florida Appraisal Rights: Fla. Stat. 607.1301-607.1340
• Hart-Scott-Rodino Act, 15 U.S.C. 18a; 2026 thresholds: ftc.gov