The Hotel Times - March 2008 - (Page 40)

IN CLOSING » BY DAVID NEFF Mind the details to stay on track Knock out potential roadblocks early to ensure success C 1 2 3 4 5 6 David M. Neff is co-chair of the Hotels & Leisure group at Perkins Coie LLP, a 650-lawyer ﬁrm. Neff is based in Chicago. losing a hotel sale should be smooth and easy, right? Well, not exactly, but some simple preclosing steps can make the process a lot easier and less expensive. Here are my top 10 tips to make that happen: If your hotel is going to serve liquor, apply for a liquor license early. Many jurisdictions have extensive approval processes (some requiring ﬁngerprints). Failing to obtain liquor licenses prior to closing will require an indemniﬁcation agreement with the seller allowing the purchaser to continue to use the seller’s liquor license until a new one is obtained. Hotel lenders have many requirements before they will fund. Get a checklist early so you know whether any requirements will cause problems. Also, get the lender and franchise company together to work out their comfort letter terms. Get a handle on employee issues. Know whether there will be Worker Adjustment and Retraining Notiﬁcation Act or union issues. Find out the accrued vacation and sick pay you are assuming so it does not become an issue later. If your hotel is going to be ﬂagged, get any required approval of the management company well in advance of closing. Speaking of management companies, make sure the sale documents require the seller’s management company to cooperate with the transition. Central to the transition will be determining the amount of money that will change hands. Such determination can depend on a host of accounting issues, such as how to value the inventory. How these issues should be resolved must be clearly set out in the sale documents. You should get all documents to the escrow agent as soon as possible. This means it is important to request third-party documents early on, such as good standing certiﬁcates and environmental consultant reliance letters. You need to negotiate the effective date of good title (the date down) with the title company and obtain coverage of the gap once you deliver the closing documents. 7 8 Get the closing statement done as soon as possible and have it checked and rechecked, especially if you have a lawyer doing the math. Get the closing statement done as soon as possible and have it checked and rechecked, especially if you have a lawyer doing the math. Don’t forget to make sure that the signatories are around to sign the necessary closing documents. It sounds basic, but too often some necessary signatory is on a plane and not available to sign a document upon which the entire closing depends. hmm@questex.com 9 10 40 The Hotel Times March 2008 www.TheHotelTimes.com http://www.TheHotelTimes.com

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The Hotel Times - March 2008 Business Outlook Editorial Outlook Contents Conference Preview Capital Outlook What's Driving Growth? European Outlook Development Outlook Fractional Outlook Branding Source List Insurance Outlook Brokers Update Brokerage Outlook Lodging's Balancing Act Transactional Facts Lending Outlook Lenders Source List In Closing

The Hotel Times - March 2008

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