Buying or selling a business? Here’s why you should hire an attorney.
Buying or selling a business comes with an extraordinary number of variables, much paperwork, and an important timeline. It can be one of the most important decisions of your life. You need an attorney representing your best interests. Here’s why: An attorney will help you evaluate the standing of the company- its assets, liabilities and valuation, including market value. Providing, collecting and examining due diligence documents can be time consuming and confusing. A qualified attorney can help with liens, leases, loans, reports, insurance claims, violations, zoning and environmental ordinances, prior or pending lawsuits, tax records -- you-name-it. It’s easy to miss something you didn’t know to look for when you are up to your ears in paperwork. An attorney can help keep the important data organized, request and follow up with important dates and documents and help put valuation in your favor. An uninformed party- whether it be the buyer or seller- stands to lose by not obtaining adequate information during the due diligence process.
But let’s pretend that you’re great at paperwork and made it through due diligence, seemingly unscathed. You’ve even drafted your own letter of intent. Before you send that letter of intent to the other party, you should have an attorney review it. After a letter of intent, there is still a lot of work to do!
An attorney will check state and local laws for your obligations as a buyer or seller. If you are a seller, you may be required to notify your creditors or other third parties prior to the date of sale. An attorney should also draft or review the purchase agreement. Any warranties, representations, or guarantees contained in (or omitted from) the purchase agreement will affect you (for better or worse) after the sale. Any indemnity provisions can come back to bite you as a seller or haunt you as a buyer. An attorney representing your best interests is a crucial part of ensuring you get a fair deal and understand exactly what it is you’re getting.
An attorney will also follow through with patent, trademark, and copyright filings, draft up non-compete clauses, and negotiate disagreements. If you are a seller, an attorney will help you finalize and terminate your ties to the business and protect yourself should the buyer fail to profit as expected.
If you are a buyer, an attorney can help you get your best legal foot forward on your new business.