Buying a business is a huge commitment, which you should never take lightly. One of the first ways you can set yourself up to be a success is by enlisting legal guidance to help you through the process of acquisition. Here are a few reasons why you need an attorney when buying a business.
- Getting ready: During the beginning process, an attorney can ensure that the business’ documents are all up-to-date to ensure everything goes smoothly. In addition, an attorney can organize the business entity (ex. the new LLC or corporation) that will make the company purchase.
- Contract negotiation and drafting: An attorney can help you structure, negotiate and document the terms of the company purchase. Signing this agreement usually is not the end of the transaction; the parties must still complete the financing agreements, due diligence and completion of any ancillary documents.
- Financing: Legal help is crucial when dealing with financing. Seller financing, through which the purchaser pays a portion of the purchase price at closing and pays the remainder over a period of time, requires a contract to protect both the buyer and seller.
- Due diligence review: An attorney can review relevant documents such as leases, vendor agreements, franchise agreements, employee agreements, and material contracts. A buyer’s attorney typically orders a UCC search to verify there are no liens against the company assets.
- Intellectual property transfer: If the business includes valuable copyrights and trademarks, at attorney makes sure the seller actually owns it and transfers it to the buyer.
- Closing: Finally, attorney make sure all the documents get signed and money exchanges hands. If there are any ancillary documents, such as a non-compete agreement, the parties sign those as part of the closing.