Whether you are buying or selling a business, your legal counsel can
make or break the deal.
It is important that you emphasize to your
attorney that you want the sale to go through. In many instances,
the sale of the business fails to close because the attorney for one side or
the other makes too many demands of the other side. Certainly, you want your
attorney to protect your interests, but not to the point where the demands are
so strenuous that the other party or his or her counsel balks. If your attorney
understands that you really want to buy--or sell, as the case may be--he or she
will be less apt to make outrageous requirements or demands. Below are some things
to consider when dealing with your attorney in the buying or selling
- Both parties should understand just what is being sold--and
- The corporate records should be current and complete.
- The seller should have available the current insurance policies
and the names of the insurance agents involved.
- If there is more than one owner, there should be a designated
spokesperson representing the group. This authorization for one
of the owners (or stockholders) to represent the business should
be in writing and signed by all of the owners.
- The buyer and the seller must both have the same understanding
of the sale and its terms. Too often, they each have their own
perception of the deal. Each party to the sale must understand
just what the deal is and who is getting what, or the sale may
be doomed before it starts.
To help prevent wrecked deals, good communication between all of
the parties involved is a priority.
Unless they are told, outside
advisors may not realize how much the buyer and the seller want
to consummate the sale. The attorney needs to know from the client that this
is a serious-minded transaction and that, unless something completely unanticipated
is discovered, his or her job is to pull the deal together. Too often what happens
is that after the offer is signed and everyone appears to be in agreement, the
ball gets dropped. Everybody assumes that everybody else is following through
and that all is fine. The attorney for one side or the other attempts to push
on an issue that is, normally, not particularly important--and suddenly, what
was once a simple transaction now falls apart. Unfortunately, the attorney thinks
he or she knows what is best for the client and draws paperwork or demands something
without even discussing it with their client. The damage is done, the other side
gets angry, and another sale "bites the dust."
The use of a professional business broker can, in many cases, alleviate
a failure to close.
The business broker--having been through the process many times,
usually much more often than any of the attorneys involved--knows the pitfalls.
However, it is important that the parties to sale are operating on the same wave
length and have the same understanding of the sale.