"If a lawyer is serving his client faithfully and well, and if a client is using his lawyer effectively and appropriately, then a legal contract should allow for the same flexibility and ongoing goodwill as a handshake deal." Mark H. McCormack - The Terrible Truth About Lawyers
Businesses acquisitions come in all types and sizes, and so do lawyers, law firms and legal services. Hiring a good lawyer is very important because they can have a great amount of input over the success, or lack of success in purchasing a business. Careful selection of the right lawyer to guide you through the process of buying a business is critical. Most people spend more time shopping for groceries than they do for selecting a good lawyer.
Whether you are hiring an individual lawyer or a legal firm, there are certain steps you should follow.
1. Interview the lawyer. Your interview should be polite but not deferential; never forget that the legal market today is a glutted market. Make your needs clear. What type of work does the firm or attorney handle? Are they familiar with small business sales and acquisitions? Ask whether there are any malpractice suits pending. This will allow you to determine their candor. Approach hiring a lawyer just like you would for hiring a manager to manage your business. Can you work with them? Will you feel comfortable making demands of them? Keep interviewing until you find someone with whom you are comfortable.
2. Check References. Ask for references of buyers they have represented in buying similar sized businesses. Before using any firm or individual, be sure to ask those former clients questions like:
a. Did the firm or attorney understand small businesses and understand the difference between giving guidance and making personal recommendations?
b. Were you satisfied with the firm's or attorney's service?
c. What bills and costs did you pay?
d. Did the firm or attorney meet deadlines?
If you can't get the names of references, keep looking.
3. Negotiate the fee. A retainer is an anachronism in today's glutted legal market. As a business person you have a better bargaining position with attorneys than you might think. Legal services are a buyers market and the fee arrangement with an attorney should be negotiated with this in mind.
Once you hire an attorney they need to understand your philosophy. They are there to give you guidance and counsel. Define the assignment carefully. For example, you may want to know if the broker's purchase contract can be used with minor changes. Otherwise, you are likely to find yourself paying $20,000 for a lawyer to draft a new contract from scratch. A $20,000 contract that is new, sometimes overly complex and unproven, not a contract that has successfully closed thousands of business sales. Remember the following in any contracts:
1. Keep it simple but make it complete
2. You want the contract to forge a relationship with a seller, not kill one.
3. It should reflect the quality of your mind
4. And, if it doesn’t sound like you, it’s going to be insincere to the Seller. You don’t want to be explaining what you meant to say, to someone who has a contract that has in it what you did say.
Defining your needs and narrowing the scope of assigned legal tasks is one way of saving legal fees and quickly closing on the business of your dreams.
Never forget that buying a business always contains risks. Owning a business contains risks. The determination you need to make, not your attorney, is whether or not those risks are reasonable and risks that you are prepared to assume. Lawyers can make a deal so complex and so frustrating that it can ruin a buyer-seller relationship. After you've closed on the business you are going to want a good relationship with the seller, therefore any contracts should help forge a relationship not kill one. You want the seller to be an ally, someone to call upon for advice when you run across problems or a change in the business happens. The odds are pretty good that the seller has successfully survived similar problems and similar changes.
A good attorney can give you guidance and counsel but make it clear to your attorney early on - preferably in writing - that you intend to retain sole and final discretion for any and all decisions. Never delegate any authority to your attorney.
About The Author: Ron Hottes, with Business Team has a business brokerage team of 42 highly skilled and seasoned professionals with offices in Torrance, Woodland Hills and Newport Beach. Our business brokers have over 100 years of cumulative experience and the expertise to help you buy or sell a business in the Los Angeles County area. Reach him by phone at 310-539-8300.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Diane Boudreau-Tschetter: Escrow And Bulk Sale Services
California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.
|Helen Yoo: Escrow & Bulk Sale Services - Southern California
New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.
|Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses
Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.
|Joe Ranieri, Business Broker, Orange & LA County Areas
Having owned retail/restaurant businesses for over 20 years, my interest turned to listing and selling businesses rather than owning them. I specialize tend to specialize in Orange County high volume restaurants, fast food independents and chains, bars and liquor stores. Call 714-292-5448.
|Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area
Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.
|Peter Siegel, MBA - SBA Loans, Non SBA Financing Assistance
For over 25 years I have provided niche business purchase financial advisory and loan placement services with SBA and Non-SBA Loans, Retirement Plan Conversions, Private Investors, etc. Financing amounts available: $20K to $7MM. Call today to get pre-qualified or receive financing: 866-270-6278.
|Bob Baumgarten, Business Broker: Orange, LA Counties
National Business Brokerage is a full service brokerage company that has been serving buyers and sellers of Southern California businesses since 1994. We are dedicated to providing the highest standards of professional service for our clients. Phone Bob direct at 949-588-8727.
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