If you talk to any business broker that has been in the industry for more than a year or two, they’ve had at least a couple of good transactions go south as soon as the Buyer or Seller involved an attorney.
Why are most attorneys deal killers?
Think about your average litigator. They go into a courtroom and in order for them to win the other side has to lose. Litigation is adversarial. The attorney’s objective is to win the case. What about a divorce, tax, asset protection, bankruptcy, real estate, or corporate attorney? For the most part, they advocate for their client with zero consideration for the other party. Their goal is to isolate their client in a bubble with zero risk and zero liability.
How do you get good legal advice without destroying your transaction?
Transactions are cooperative – or they fail! The reason most attorneys are deal killers is because they can’t wrap their minds around win-win outcomes and cooperative efforts. But the good news is that there are Transaction Attorneys out there! Transaction attorneys realize that a successful transaction, and more importantly a successful transition, requires a cooperative effort by both Buyer and Seller.
There are risks to both sides when buying or selling a business.
A good transaction attorney educates his/her client as to risks and concerns identified that may not be ideal, but in the overall scheme of things are not so detrimental that they merit terminating a transaction. Do situations arise that should cause the buyer or seller to terminate? Yes, but rarely.
The biggest difference between a transaction attorney and an attorney of another specialty is that a transaction attorney recognizes and weighs the risks of a dead transaction along with the risks associated with proceeding with a given transaction. In other words, non-transaction attorneys don’t seem to acknowledge that there is any risk or damage to their client associated with a killing a transaction.
If you’re going to include an attorney, get a transaction attorney!
If a seller wants to sell and the buyer wants to buy then there is almost always a way to structure the transaction to achieve the objectives of both parties. Whether you are buying a business or selling a business, it is a good thing to have an attorney review your paperwork and ensure you are aware of your rights and duties under the contract. You absolutely should know what you are getting into! However, make sure you are consulting with a transaction attorney because they will help you find ways to make the transaction work instead of throwing out obstacles that ultimately kill it.
About The Author: Tawnya Gilreath is a business advisor at LA Business Pros. LA Business Pros provides business consulting, sales preparation, value maximization, acquisition targeting, due diligence assistance, transition planning and implementation, and business intermediary services for business buyers and sellers. They specialize in working with business owners and buyers to maximize the value of their business investments. Tawnya can be reached at 818-781-0082.