You Don't Know What You Don't Know: Everything You Need to Know to Buy or Sell a Business by Terry Lammers

Author:Terry Lammers [Lammers, Terry]
Language: eng
Format: epub
Publisher: Stonebrook Publishing
Published: 2017-12-05T23:00:00+00:00

5.

Hire the Right Attorney

What kind of attorney should you hire to help you through the process? If you’re buying or selling a business, you should hire an attorney who has experience in M&A transactions. Depending on the size of the transaction, he or she may need the help of another attorney. Maybe someone who specializes in taxation. There’s nothing wrong with that. Just remember that you’re the one who is paying the bill.

Speaking of bills, what should you expect to pay? Attorneys are generally paid by the hour, but there is nothing wrong with asking what you should expect the overall cost to be. Some attorneys will give you a set fee, and I’ve seen this for both large and small transactions.

There are a few ways to keep the costs in check. First, be as organized as you can. Get the information to your attorney in a timely manner and make sure that what you provide is accurate, so they don’t have to rework it or follow up. Time is money.

Second, make sure your attorney is not a deal killer. If your lawyer wants to argue every point, you’re probably never going to get a deal done. Attorneys are focused on mitigating risk, and their job is to protect you. However, you need to make sure your legal counsel knows your tolerance for risk and how to choose your battles. Too many times, I’ve seen a client accept what their attorney says as gospel and then dig in their heels because of it. Some things aren’t worth the fight, while others will be a clear yes or no. You have to make your own decisions, and you should be the one who tells your attorney when to fight and when to leave it, not the other way around.

It’s often cheaper to have the other side draft the asset purchase agreement and have your attorney review it. Less time on your side means less cost. That said, in my case I often had my attorney draft the sales contract because we had purchased several other oil companies, and the deals were all in similar format. I would tell the seller that we had done this before and let them know what the sticking points would be with their attorney. This was very effective and helped keep the ball moving.

In smaller deals, some buyers and sellers like to share an attorney and split the cost. This falls under the “don’t make a mountain out of a molehill” logic. In situations where the buyers and sellers of a small company know each other and trust the attorney, this allows the deal to get done efficiently—and at half the cost to each party.

I have had a number of experiences with attorneys, and thankfully most of them have been good. There was one exception. With my very first purchase, the seller and I agreed on nearly every point, but the two attorneys bickered over every if, and, or but in the contract. We finally told

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