What Kind of Lawyer Do You Need To Sell Your Small Business?
We often recommend hiring a few professionals to help you sell your business. Generally, a good business broker, an accountant, and a lawyer should make up your sales team.
A good lawyer is not a terribly expensive addition to your business sales team, and they’re worth every penny. But what kind of lawyer do you need? Do you just hire the lawyer that drafted your estate planning documents? Or the one who helped your black sheep cousin stay out of jail? Probably not.
Types of Lawyers
Lawyers almost always specialize in a fairly narrow area of law. When it comes time to sell your business, you want a lawyer with the right experience. Some attorneys practice general “business law”, which means they’re experienced with drafting common contracts, forming and dissolving business structures, negotiating business terms, and looking out for legal issues that can come back to bite you. Often, a trusted business lawyer is a good candidate to help with your small business sale.
If you really want to get a specialist, you can search for lawyers who devote a significant portion of their caseload to business sales transactions. These lawyers typically market themselves as “M&A lawyers”, or more broadly, “business transaction lawyers”.
Regardless of how they market themselves, be sure to ask about experience with the key types of legal work they will need to manage:
- Advise on negotiation strategies.
- Advise on implications of various financing options.
- Draft or review the buy-sell agreement.
- Advise on how to structure the sale.
- Advise on tax consequences.
- Conduct and respond to due diligence.
- Manage the transfer of ownership and any associated legal liabilities.
If you’ve already engaged a business broker, they should have suggestions for attorneys they’ve used successfully in the past. It’s always a good idea to speak with several lawyers before retaining one. After a few brief initial consultations, you will get a good sense of which ones are clearly experienced and with whom you feel comfortable.
Legal Fees
You will also want to get a ballpark cost to retain their services. Some lawyers will work on an hourly basis, while others may charge a fixed-fee for the entire transaction. If they’re retained on an hourly basis, be sure to ask about the expected billing range for a typical business sale. You don’t want to be caught off guard with unanticipated expenses when it’s time to collect your check. Good lawyers can easily charge $200-400 an hour, and it adds up quickly.
Want to get a better understanding of the expenses involved with selling your business? See our latest article, How Much Does It Cost to Sell a Business?