Do you need your own lawyer for buying a business?
Yes you do!
I’m often surprised by the things that sellers say to my clients. They’re usually in a hurry to sell (and get their money) so they might pooh-pooh your suggestion that you get a lawyer to review the transaction documents. They might even say “don’t worry, everything is OK – I had my lawyer put it together.” Here’s the scoop. The seller’s lawyer has only one person’s interests to watch out for and that’s the seller’s. In fact, if the seller’s lawyer can do something that will massively benefit the seller even if it just as massively screws you over, I can guarantee that the lawyer will do it. It’s called “just doing his/her job.”
For a transaction as important and valuable as buying a business, you absolutely need a lawyer who is 100% committed to, and responsible for, your interests and your interests only.
What kind of things can I do for you when buying a business?
The list of things that I can do as a lawyer helping you with how to buy a business is quite long. Here are just a few examples:
- Negotiating and signing a letter of intent (including what needs to be in this letter: issues like exclusivity, notice of other interested buyers, due diligence issues, timing, terms)
- Make sure that what you were promised is actually what is written into the purchase and sale agreement (verbal promises mean nothing after documents are signed).
- Make sure that if you intended to purchase a business you actually get a business, instead of just some business property. For example, if you were purchasing a contractor’s business this could be the difference between purchasing just a few tools on one hand, and purchasing a turnkey business with existing clients, an established brand name and the associated good-will.
- Review existing service contracts to make sure they are truly assignable (as the seller might represent). If you “buy” a bunch of contracts that cannot be assigned, then you basically just bought a list of potential clients who can easily choose not to do business with you.
- Negotiate terms that you want included but don’t know how to get or write.
- Help you understand and add terms that you should include in the documentation when buying a business but may not know about.
- Help make sure that the right documents are used especially if leases or real, tangible, or intellectual property are to be transferred.
- Help you with due diligence and seller representations on issues such as tax status (like making sure all the taxes for the seller have been paid up), liens, financials, and employee issues.
- Assist you with analyzing and reviewing tax considerations of buying a business such as allocation of assets for depreciation purposes including completing IRS Form 8594
- Ensure that closing goes smoothly and you don’t sign any documents you don’t understand or expect