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: Florida provides appraisal rights under Fla. Stat. 607.1301-607.1340. The statute has a market-out exception (Fla. Stat. 607.1302) -- shares listed on a national securities exchange or held of record by 2,000+ shareholders are generally not entitled to appraisal rights unless certain conditions are met.

6. No Formal Tax Clearance Requirement: Florida does not require a formal tax clearance certificate from the Department of Revenue before filing merger documents or dissolving. However, all tax obligations should be satisfied, and obtaining informal clearance is recommended.

7. No Bulk Sales Act: Florida has repealed UCC Article 6 (Bulk Transfers). No general bulk sales compliance is required.

8. Documentary Stamp Tax: Florida imposes documentary stamp tax on transfers of real property at $0.70 per $100 of consideration (Fla. Stat. 201.02). Miami-Dade County uses a rate of $0.60 per $100. Additionally, new mortgages are subject to intangible tax at $0.35 per $100 (Fla. Stat. 201.08). These are significant costs in real estate-heavy transactions.

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: Florida enforces non-competition agreements under Fla. Stat. 542.335, which provides a detailed framework including presumptions of reasonableness for time periods (2 years or less is presumptively reasonable for former employees; 3 years for sale of business).

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 obtain informal sales tax clearance from the Department of Revenue in asset purchases
• Not starting AHCA healthcare license transfer early enough (60+ day process)
• 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; failure to file by the third Friday in September results in administrative dissolution
• HSR filing (if applicable): 30-day waiting period from date of filing
• AHCA healthcare license transfers can take 60-90+ days; start early
• 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; 2025 thresholds: ftc.gov