Often times business owners ask “why do I need to engage a lawyer before buying and selling a business”? The answer is WHY NOT?!
A lawyer engaged at the outset of commercial acquisition and/or sale is a prudent first step in avoiding contract confusion, ease of negotiation and to decipher want type of agreement, be it asset purchase, share purchase or the like, is best suited for all parties involved.
Regardless of how a transaction is structured, buying and selling a business is a complex transaction and the commercial lawyer can help every step of the way from the first step of negotiations to the last step of closing the transaction and any post-closing matters thereafter.
One trap in contract negotiations when it comes to businesses that fail to engage a lawyer at the outset are contract conditions. Contract conditions are set out in an agreement for the benefit of both parties. Conditions are certain items such as the purchaser obtaining financing; review of lease agreement; and/or review of financial statements to ensure that the business is viable and that the purchase price is accurate. Failing to include conditions can muddy the waters; result in a loss of any deposits made by the buyer; cause contention between the parties before the transaction has even completed.
Closing documents in a commercial transaction can be complex. The commercial lawyer is there to guide and to prepare documents that may be overlooked such as permits, licenses, consents, assignments and the like. Retaining a lawyer before the contract is signed, sealed and delivered simplifies the lawyer’s tasks in preparing the closing documents due in part that the lawyer would be conducting the appropriate due diligence searches and review of pertinent documents (for example franchise agreements, licensing agreements, employment contracts, etc.) at the negotiation stage.
In most commercial transactions, a lawyer is required in order to close the transaction anyway therefore, what does a business have to lose by retaining a lawyer from the outset?
SN Law Office has a wide range of experience in buying and selling businesses. If you are considering buying a business or selling your business, give us a call so we can assist you…every step of the way!