Thinking of buying another business? An attorney can be an invaluable member of your team. You'll need a pro who can draft agreements, review contracts, and assist with the due diligence that’s required to complete an acquisition.
But how do you find a great one? This article will help you make a smart call.
What kind of attorney should I look for?
Some attorneys work exclusively with small businesses. They help owners with every step, from setting up a legal entity and drafting up contracts to taking on more complicated tasks like acquiring a business. This group of attorneys can be immensely helpful as you pour through a business's contracts, ensure its intellectual property is properly filed, make sure that leases are transferable, and negotiate the terms of a deal.
You could also choose a legal generalist who can help you navigate basic contracts, work through price negotiations, and review terms. The risk here is that this attorney might not have a lot of experience in helping one business acquire another.
You could also work with an attorney who specializes in mergers and acquisitions. These pros spend the bulk of their time on the kinds of tasks you're about to take on. Many are highly experienced and very well qualified for this kind of work. Of course, M&A attorneys can also be more expensive than those in the other two categories.
Whether you choose a generalist or an attorney who specializes in M& A or small business needs, make sure you select one who's knowledgeable and experienced with the issues you face.
How do I select the right one?
Find a few attorneys with acquisition experience. You might do this by asking your accountant or others in your field for a recommendation, or you could use our free service to connect with a local attorney. If you'd like to take this route, click the Connect button below to get started:
Next, arrange a free in-person consultation. You can use this time to explain your goals and learn about how they can help. Be sure to ask lots of questions of each candidate. Later, you can compare their responses.
Here are some questions that can help you gauge their knowledge and expertise with small business issues:
- What is your experience with small business acquisitions?
- Have you drafted letters of intent and sales agreements for acquisition?
- Do you have experience leading price negotiations between business owners and brokers?
Next, ask about their practice, availability, and style of communication:
- Which members of your team will handle my requests?
- Could you refer me to another lawyer if an issue fell out of your realm of expertise?
- How long might it take for you to complete your part of the due diligence process?
- What is your fee structure?
- Will you have any conflicts of interest in taking on my business?
- How (and how frequently) will you communicate with me?
You'll learn a lot about the attorneys you have in mind by meeting with them. Pair what you learn with online reviews, verification of licensure, a review of the attorneys’ websites, and web searches. The data you collect will help you make an informed choice.
What about payment?
Payment is a huge consideration, especially if you're looking to reduce the costs of your acquisition. Be sure to ask your attorney candidates about their preferred payment arrangement and whether they offer any payment structures that could help you minimize or defer your legal costs. Here are a few that could be available:
- Flat fee. Your attorney may offer a flat rate for drafting an LOI, sales agreement, or other standard legal documents. This arrangement can help you budget the initial costs of acquiring a business.
- Discounts for multiple services. Your attorney might offer you a reduced rate for committing to use the firm for all the documents and negotiations that’ll be required to acquire a business.
- Contingent fee. Your attorney may be open to receiving payment upon completing an acquisition rather than paying as services are provided.
- Equity in the business. Your attorney may agree to accept equity in your newly acquired business in exchange for upfront and ongoing legal services.
The attorney you choose might require an upfront payment or retainer. The retainer can be refunded if the value of the service provided is less than the retainer value, and you may be billed for additional costs that exceed the value of the retainer.
Are there other ways to save?
One way to reduce some of your legal costs is to use a legal form site. LawDepot is one option that offers standard legal forms and services for a low monthly or per-item rate. However, many entrepreneurs prefer to work with a lawyer or legal team to ensure that their legal documents are filed completely, accurately, and without any oversights that could negatively impact the transaction.
Am I ready to get started?
Finding a great attorney is an important step. Next, you’ll need to find a highly qualified accountant to help you assess, valuate, and make projections about target businesses. Our article, Find an Accountant for Your Acquisition, offers some must-read advice for finding a knowledgeable professional.
Interested in connecting with a qualified accountant? Use the search tool at the bottom of the page to get started.
Then, log into your owner’s portal for articles and advice that can help you source, assess, negotiate, and compare funding sources and close on your new small business.