Buying a business? It’s a must to include an attorney on your team, especially as you work through the complex parts of the acquisition.
But which kind of legal practice you need? And which attorney in that realm has the right sets of skills and experience to support you through the process?
In this guide, you’ll find the answers you need. You’ll learn how to find a great attorney and determine which tasks you should allocate to them—and which tasks you can take on yourself.
Who do I need?
Most business owners will need a small business attorney who can draft agreements, review contracts, and assist with the due diligence that’s required to complete an acquisition.
You might choose to work with a legal generalist who can help you navigate basic contracts, work through price negotiations, and review terms, or you can choose a lawyer who specializes in small business mergers and acquisitions or startup support. Whether you choose a generalist or an attorney who specializes in small business needs, make sure you select a person who is knowledgeable and experienced with the issues you face.
How do I select the right one?
Your attorney will play an important role in your acquisition, so you must be diligent in choosing a great one. Start by locating multiple attorneys who have experience with acquisitions and arrange a free in-person consultation.
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When you meet, ask about their experiences, strengths, and styles of communication. 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?
- Do you have experience drafting letters of intent and sales agreements for acquisition?
- Do you have experience leading price negotiations with business owners and brokers?
Next, ask about their practice, availability, and style of communication:
- Who are the members of your legal team, and who will be handling my requests?
- Would you be able to refer me to another lawyer if an issue emerged that fell out of your realm of expertise?
- What are your typical turnaround times for contract formation and the documentation I’ll need to acquire a business?
- What is your fee structure?
- Will you have any conflicts of interest in taking on my business?
- Will you be willing to communicate with me through my preferred medium (in-person meetings, phone calls, or emails)?
Pair what you learn with online reviews, verification of licensure, a review of the attorneys’ websites, and web searches to ensure you have enough information about your attorney candidates to make an informed selection.
What about payment?
Payment is a huge consideration, especially for owners looking to reduce the costs of their acquisition. Be sure to ask your attorney candidates about their preferred payment arrangement and whether they offer any of the following payment structures that could help you minimize or defer your legal costs:
- 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. Here is an article that can help you find a knowledgeable professional:
Interested in connecting with a qualified accountant? The search tool at the bottom of the page can help you 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.