Using Attorney Help in Buying a BusinessThere is no doubt that you should use attorney help in buying a business. Some business purchase transactions are simple enough to do with the right legal paperwork template but even then, I would never recommend taking on the risk of spending your hard earned money without proper protection that a lawyer can help provide. What I want you to be aware of is the fact that attorney help in buying a business should be used for specific areas of the transaction. Lawyers can sometimes be a good resource for possibly finding a good business for sale and finding a good business accountant. But they are not usually a good source for business related advice and it's not their place to give that advice. Unfortunately many will push it on you if you let them. The remainder of this section will explain using attorney help in buying a business by getting involved with a business buying/selling savvy lawyer.
Attorney Help in Buying a Business- Reality Check Some people have a true hate for attorneys and some think they walk on water. The reality of the situation is that they are what you, the client, make of them and their services. Getting an attorney to help in buying a business is no different than using them for any other legal aid. You need to keep in mind that some attorneys are better than others like anybody else you may come across that provides some sort of professional service. Just like picking out a doctor, you must feel comfortable with them personally and with their professional experience. You are the client and therefore, you are the boss, not them. You are hiring them to do a job and it is your job in the process to keep them focused on the prize... closing on the sale of your new business. Although usually with the best of intentions, many attorneys like to show off their brainpower or prove why you are paying them whatever rate or fee you have agreed upon. You can't let this happen because the result will be a delay and possible a scuttle of the entire deal. Stay in control and the lawyer you have hired will finalize your dream of buying this particular business into a reality and keep you protected in the process. Do not let anyone but you be the cause of a deal not happening. If you have gotten this far, nothing should stop this transaction from occurring, especially your attorney or the seller's attorney.
Attorney Help in Buying a Business- When Should I Hire One? You should have an attorney ready to go before you actually start looking for a business to buy but after you have done your prep work . At this point you won't need their services so make sure the one you choose understands that. There is no need to put any kind of deposit or retainer down at this point either so don't get sucked into putting out any money.
Attorney Help in Buying a Business- Why Should I Hire One? You will need attorney help in buying a business when you have decided to put in an offer and a Letter of Intent (LOI) has been established. This is a basic legal type document that is non-binding so you won't need your lawyer for it but you may want him to look at it if you are unsure of yourself. If you are working with a Broker, they will have an LOI for you to use. If not, you can always get a basic LOI template. Just remember, if you want an attorney to look at an LOI, they can't help much with the important list of contingency items that must be met for you to conduct your due diligence such as what financial information or business related lists you wish to see. You must be prepared to list these out yourself or get the help of a Business Broker and your Accountant. As you come to the close of the due diligence process and are ready to buy, the attorney help in buying the business really kicks in. Often the buyer's attorney is the one to start the contract process. (S)he will need the seller's attorney contact information and use the LOI to to start writing up a purchase contract based on the type of sale (asset or stock). Once things get rolling with the contract, your lawyer will also be doing any type of legal/government background checks necessary such as title searches on property and assets, tax clearance checks, etc. The role of both lawyers will be to translate what you and the seller have already agreed upon regarding the business sale into a legal format that ends of serving the best interests of both parties then bringing everything to the closing table to exchange money, titles, etc. Typically this should be accomplished in 10 business days from the end of due diligence, which marks the start of the contract phase.
Attorney Help in Buying a Business- Hiring One Hiring an attorney to help in buying a business should not be an extremely difficult task. Your best bet is to first ask around to business accountants, business brokers and other business owners regarding lawyers that are versed in the buying and selling of small to medium sized businesses. There is no need to get an attorney that does huge mergers & acquisitions work. This is over kill on their skill set and their price tag that goes with it. For general businesses like retail, service or distribution companies, a lawyer with any business buy/sell experience should be able to do the job without any issues. If buying something involving environmental issues such as a gas station or a car wash as well as businesses involving special licensing such as a bar or liquor store, then you really need to get someone with specific experience with these transactions. They are not always cut and dry especially when dealing with government issues. How much will it cost? Well, that's not simple to answer but I can give you some insight. For an attorney to help you in buying a business they will typically charge $150-$300 an hour. I know that doesn't help especially since the $150 an hour one is probably just about as good as the $300 an hour one. The key is sticking to the attorney with proven experience in business purchase transactions especially when dealing with a complicated transaction like those involving environmental or licensing issues. Expect a typical small business purchase with a price tag of $125,000 to $300,000 to run you in the neighbor hood of $2000-$4000. That would be a fair price for the work to be done. Again, with a more complicated transaction as mentioned above involving environmental, government or licensing issues, the price tag could get to double the high end of this spectrum and maybe a little more. If at all possible, get your attorney to commit to a set price. If they have handled the purchase transaction of a business exactly like yours, then they should be able to have things done quickly and simply so a flat fee shouldn't be an issue. This way you know they won't drag things out and they will stay on the other lawyer and not let them slow up the process either.
Attorney Help in Buying a Business- Some Final Notes I just wanted to quickly sum up the facts about using attorney help in buying a business.
Here's a little tip from someone who has had to deal with lawyers in transactions many times: Have your attorney give you a list of tasks to be completed for this transaction to go through. Anything on that list that you can do, such as gathering information from accountants or the seller himself, do it yourself. It will save you time and in an hourly billing situation, it will save money too.
Stay on top of your lawyer but don't become a nuisance and everything will work out fine.
|
