When selling your business, it’s highly recommended that you find legal help to work through the legalese of the transaction. Despite what you might think of attorneys in general, there are many solid professionals that specialize in the transition of business ownership. Even if you have your own attorney, or a colleague has referred an attorney, you need to make sure to select the right one for this moment in your career. There are many lawyers that will take up your transaction for the extra work, but there are fewer that can do it right. This is not something to take lightly, and it’s better to do the due diligence up front than get burned later.
Not Just Any Attorney Will Do
The difference between attorneys is like the difference between a machine shop and a fabrication shop. Each shop has its specialty and it’s hard to expect a machine shop to deliver on the fabricator’s specialty (likely welding) as well as the fabrication shop. Likewise, it’s difficult to have the same expectations for a criminal attorney as you would have for an attorney that specializes in business transactions. Whatever opinion you might have about your personal attorney, they could be poorly suited to handle the sale of your business. Beyond costs, you will want to check references and interview the lawyer before you hire them. Try to get a grasp on their background doing transactions on a similar scale. If you know other former owners that have sold their businesses, it doesn’t hurt to inquire and ask questions. Those with positive experiences with their attorneys could refer someone perfect for what you need.
Why Hire a Transaction Attorney
Attorneys are most often trained to litigate, and are not always prepared to handle the nuances of a business transaction. This is a completely different ballgame, with its own challenges and legal boundaries to consider. It’s also worth noting that there are specialties even within transactional law. The transition of intellectual property and art, for example, would be sub-categories of transaction law. Ideally, you will want to find an attorney that specializes in the transition of business ownership, especially manufacturing business ownership (where the transaction of assets and liabilities can become more complex). In addition to the tax implications of a sale (asset sale vs. stock sale), you might also negotiate the warranties, lawsuits and other liabilities that could transfer to the new owner, or remain in your hands. You want to get the best end of the deal, and a proper transaction lawyer can help you do it. It’s also worth noting the party that drafts the transition documents (most likely the buyer) should bear the brunt of the legal costs.
Don’t Be Afraid to Fire an Attorney
While you should never be cynical, it’s healthy to be critical and a little skeptical at times. The sale of your business is one of the most important decisions of your life, so it only makes sense that you would want your lawyer to have your best interests at heart. Unfortunately, some attorneys can and will take advantage of the situation, using your business sale as a way to book hours. If you don’t think you’re receiving a satisfactory performance from your attorney, even if your relationship is long-standing, you shouldn’t be afraid to cut ties in order to do what’s best for your business.
Remember, At the End of the Day, You’re Doing Mutually Beneficial Business
While each party will strive for the best deal for themselves, selling your business shouldn’t be a contentious battle of shrewd tactics. In most instances, you’re working in collaboration with a buyer to receive what you deserve while your business is transitioned into good hands. A lawyer is a useful safety net to ensure your transaction proceeds as smoothly and fairly as possible. If serious concerns arise or a standstill over issues is reached, you should never be afraid to call an “all-hands” meeting with all parties to resolve the issues. When customers, employees and vendors are at stake, both parties should always strive for a cordial, mutually beneficial transaction.