When Do You Need an Attorney to Sell Your Business?

The extent of an attorney’s involvement in mergers and acquisitions (business sales and purchases) is ultimately determined by the seller or buyer.  An attorney can be involved on each side of the deal.

It is useful to consult with an attorney prior to making any decisions.  If an attorney is involved from the beginning, you can expect certain benefits:

(1) The attorney should spend time with you discussing and establishing your wants, needs, and expectations throughout the process;

(2) The attorney should conduct a full and thorough audit of your business to make sure that the business has sound legal footing, including any legal and tax implications;

(3) The attorney should analyze the information gathered and make recommendations to improve the operations and value of your business, including but not limited to management structure and employee job descriptions and contracts; and

(4) The attorney should assist with the appraisal, listing, and marketing process.

Often, sellers or buyers begin the process of purchasing or selling a business, and their consult with an attorney.  In these scenarios, the attorney should participate in the negotiations of terms, preparation of the letter of intent, management of due diligence information exchanges, and preparation of sales documents.  The attorney can also conduct the closing.

In other instances, attorneys have been brought in as counsel only to draft the key documents and oversee closing.  During this stage, the counselor would discuss any legal and tax implications, which on occasion results in restructuring the nature of the sale.  Once this occurs, the negotiation process starts over.

Regardless of what stage the attorney is involved in, the attorney should work respectfully with the other professionals, including accountants, financial planners, investment bankers, business advisors, and other attorneys.  We encourage coordinated efforts.  The attorney should ensure that you are protected, throughout the process and as you accomplish a successful outcome.

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