Best Practices in Working with Your Legal Counsel
The process of buying or selling a business requires experienced legal advice. Your attorney should understand your primary expectations right up front – for successful completion of your deal. Many a business deal has gone south because attorneys did not meet their client’s expectations. Instead, they focused on small things that had the potential to derail the deal or made too many demands on the other party involved.
If you are ready to start negotiating the close of a business deal, your legal counsel needs to understand that the top priority is to get that deal done! While they should always be looking out for your best interests, it should not be to the detriment of the deal.
When you have made a final decision about the business you are buying or selling, inform your legal counsel that you have already examined the books, talked to the employees, toured the business, and examined the equipment and contracts that come along with it. Make it clear that you are satisfied with everything thus far.
If you are the seller, make sure to emphasize the importance of getting the sale to go through. Of course, you want your attorney to help protect your legal interests, but you must walk a fine line and not make outrageous requests of the buyer.
Effective communication is key when working with your legal counsel. An outside party like an attorney may not be aware of all the business negotiations that occurred before they were brought in. Likewise, they may not completely understand their client’s desire to get the deal done as smoothly as possible. Attorneys bill by the hour and can be quick to make demands, pick apart contracts, and cause delays that could ultimately kill the deal.
Be clear about your desire to buy or sell and carefully explain that you’d like their role to be helping to ensure the deal goes through. Tell your legal counsel that unless something unexpected turns up in a contract that is detrimental to you legally, you will not want to make a lot of demands that would hold up the transaction.
Go through this checklist of questions with your attorney before you continue any business transaction.
- Do all parties thoroughly understand what is being purchased or sold?
- Are all corporate records current and complete?
- Has the seller produced current insurance policies and names of all agents involved?
- Has a spokesperson been designated if there is more than one owner and does that person have legal authorization to represent the business?
- Is everyone clear on the terms of the sale and have they signed something to that effect?
Proper Follow Through
Even after documents are signed, good legal counsel will follow through to ensure everyone is abiding by the terms of the closing documents. Your attorney should quickly intercede if the other party attempts to make any last-minute demands or changes. Your attorney should also not be the one who attempts to change the deal after it is made with new demands on your behalf without your consent.
The Role of M&A advisors
Enlist the guidance of an experienced M&A advisor throughout the process of buying or selling a business. M&A advisors have the experience and knowledge to work with you and your attorney to avoid any legal complications that could derail a deal.
Darren Harrington is Vice President Commercial Business-M&A of Creative Business Services/CBS-Global.
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