Updated: February 2, 2023
If you are in the process of selling your business you may be wondering if you should hire a lawyer to help you. The following article will review the benefits of hiring a lawyer for the sale of a business. For help with selling your business, contact our knowledgeable business sale attorney in Glendale today!
Reasons You Should Hire a Lawyer When Selling a Business
There are many pitfalls that you can encounter when selling a business. Having help from a Glendale business sales attorney can help you with the following issues:
To Handle the Paperwork
The sale of a business requires the completion of several different legal documents in order to be compliant with state and federal regulations. A business attorney will know exactly what documents are needed based on the local laws of your area. Based on the specifics of your business, you could need any of the following popular business sale documents:
- Offer to Purchase Agreement
- Personal Financial Statement Form for the Buyer
- Non-Disclosure Confidentiality Agreement
- Note of Seller Financing
- Current Financial Statements of the Business
- Earnings and Cashflow Statements of the Seller
- Financial Trends
- Accounts Payable and Accounts Receivable Reports
- Inventory List
The above-listed documents can be gathered when preparing to sell the business. These documents are used to attract and inform potential buyers. They list all necessary information about real property, assets, and employees of the entity. If the seller and prospective purchaser decide to move forward with the sale, the following additional documents are required:
- A Letter of Intent
- Purchase Agreement
- Transfer of Ownership
An experienced business attorney will be able to help you gather all of the necessary paperwork, complete everything without mistakes, and move forward at a reasonable pace. Such assistance can save you time and money by ensuring you will not suffer any legal consequences or delays due to error.
To Negotiate a Fair Sale
The negotiation process of securing a fair price is one of the most important parts of a sales deal. An experienced business lawyer will be able to evaluate all variables and factors in order to determine the value of your entity. They often work with appraisers, accountants, insurance brokers, and business brokers to establish a fair market value.
FAQ: What are some common mistakes to avoid when selling your Glendale business?
After assessing the personal financials of the business owner and the financials of the entity itself, a lawyer will help you set a fair asking price to attract potential purchasers. Once a buyer shows interest and begins the legal proceedings of the business transfer, an attorney assists in negotiating optimal pricing. Any time and money spent on a lawyer is an investment in securing the highest purchase price possible.
For Legal Representation and Counsel
When selling a business entity, a lawyer provides assistance in thoroughly examining all sides of the deal to ensure there are no surprises and that all parties deliver what was promised. They also provide legal representation for any scenarios that may require changes to the initial provisions of a contract or for any protections that may be necessary for the seller and the employees.
This includes a detailed analysis of the purchaser's ability to complete payment, the creation of any contractual obligations to uphold the integrity of the business, as well as establishing liability terms for both parties. A lawyer is also looking out to ensure that all contractual, regulatory, financial, and technical obligations are met. If anything goes awry during the transaction, a lawyer can provide legal advice and representation to the seller to ensure a fair sale.
Enlisting the service of a knowledgeable business lawyer can protect your assets in future business dealings.
Legal Issues That May Come Up When Selling a Business
Because the sale of a business can be a lengthy and complicated process, knowing what issues may arise can help prepare you for the endeavor. Attempting a sales deal without the legal services of a business attorney can increase the likelihood of legal issues. Here is a list of common complications when selling a business:
- Business Type - if the business has multiple owners or partners, they must all be in agreement about the details of the sale. Even if all parties are on the same page, the process of adhering to all legal requirements specific to the business structure can become complicated
- Tax Issues - understanding the tax liability of the seller and buyer before the deal is closed is paramount to preventing issues when it comes time to file tax returns
- Employees - the protection and management of employees during a business transfer can sometimes lead to complications
- Unfinished legal processes - any lawsuits, insurance necessities and claims, fees, and registrations should be settled and completed before moving forward with the business transfer agreement
- Property leases - the need to notify property management during the sale of the entity can be case-specific. Consulting with a legal professional can help prevent issues down the line
Experienced business lawyers will be able to provide legal counsel to prevent or prepare for any and all issues during the transfer. In some areas, it may be helpful to speak to a tax specialist or your insurance provider. An attorney can provide recommendations for those areas as well.
Documents You Should Show a Lawyer When Selling Your Business
When preparing to meet with a lawyer about the sale of your business entity, the following documents will be useful to begin the process:
- Copy of business license, registration, permits, and any agreements related to the structure of the company and its owners/partners
- Insurance Policies
- Leasing Contracts
- Current employee contracts
- Financial documents - bank statements, accounts receivable, accounts payable, etc.
- Recent tax returns
- List of creditors
- List of shareholders and their percentages
- Pending lawsuit documents
- Complete list of property, assets, and inventory
- Copies of outstanding contracts
Learn More: What is the Business Litigation Process?
This list covers the more common documents, but may not be all-inclusive for your entity or attorney's needs. Essentially, any documentation about the financial status, business structure, and legal requirements of your business will be pertinent to your lawyer.
Contact Our Firm if You Have Any Questions About Selling a Business
To learn more about what paperwork you may need, contact a business law firm today to begin the process of selling your business. At Monahan Law, we believe in establishing long-term and personal relationships with our clients to provide the best results possible.