Buying or selling a business can be both exciting and frightening. However, using an attorney to assist you can ensure that this process remains exciting and profitable. The goal of this article is to explain why you need an attorney when buying or selling a business, the benefits to engaging an attorney for the purchase and sale of a business, and how to make the purchase or sale of your business a positive experience.
Why Do I Need an Attorney?
The first reason for using an attorney is knowledge. Attorneys are professionals and those who specialize in the purchase and sale of business have the industry and legal knowledge required to complete the transaction. For example, an attorney will know what documents are needed to ensure that both the buyer and seller’s interests are adequately represented and protected. Most transactions require an Asset Purchase Agreement, Certificate of Incumbency, Non-Compete Agreement, and a variety of other corporate and lending documents. Engaging an attorney to assist you in the sale of your business will ensure that all of the documents are in compliance and completed properly so that the sale goes smoothly.
Second, protection is essential especially when engaging in the legal process of buying or selling a business. Those selling their business without the assistance of an attorney may often be taken advantage of, forget a clause relinquishing all liability and debt, or forget a document that leaves the selling party open to risk of litigation or open taxes and liens. Protection may also present itself through the presence of a Non-Compete agreement, which protects the purchaser of a business from potentially competing with the seller if the seller decided to open a similar business close enough to compete with the buyer. An attorney would prepare a Non-Compete Agreement that is both applicable and legally binding to provide the said protection to the parties of the transaction.
The final reason to use counsel is efficiency, which may be the most important aspect of hiring an attorney when buying or selling a business, especially if one of the parties is already using one. As professionals concentrating their practice to business law, an attorney would be able to quickly communicate, prepare documents, negotiate terms, and exchange information on behalf of his or her clients. For example, at the Marzella Law Group, all of the requisite documents for the buyer or seller (whomever is being represented) are completed shortly after the engagement so that the transaction can be closed as quickly as possible for the convenience of both parties.
Net to You
At the end of the day, buying or selling a business is complex. Allowing an attorney to assist you with this process will help ensure that the transaction is handled appropriately, efficiently, and that all parties’ interests were represented and protected.
The next question is how much does an attorney cost? Typically, fees for the purchase or sale of a business range from about $3,500.00. However, the modern trend is charging a percentage of the sale price similar to real estate agents in a property transaction; the most common percentage is 1.00% of the purchase price for Sellers and 1.25% for Buyers.
Your key takeaway from this article should be that the next time you are buying or selling a business, the question should not be “do I need an attorney?” but rather “which attorney am I using?”