do you need a lawyer when selling a business

Full Answer

Do I need a business lawyer?

This article will explain when you can cover legal issues on your own or with minimal attorney assistance and when you will definitely need a business lawyer. There are certain matters that are fairly straightforward and/or not unduly difficult to learn and therefore do not require the services of an attorney who charges at least $200 per hour.

What are the laws for the sale of a business?

There are specific laws in every state which regulate the sale of a business within its jurisdiction. These laws outline which actions the buyer and seller must take prior to the closing of the sale. It is important that you understand what these rules are because if they are broken, you could face a fine or a halt in the sale of the business.

What are the legal risks of selling a business?

Otherwise, you run the risk of facing legal ramifications after the sale if the buyer becomes unhappy with some aspect of the business that they purchased from you. Full collection of sales documents (30+ files) to download

How much does it cost to hire a small business attorney?

There are certain matters that are fairly straightforward and/or not unduly difficult to learn and therefore do not require the services of an attorney who charges at least $200 per hour. There are enough expenses associated with running a business, why not save yourself a load of money and do it yourself if you can?

How do you protect yourself when selling a business?

Get clear on the actual worth of your business.Understand exactly what's being sold.Consider the value of intangible assets.Involve your accounting and legal teams.Seek out industry-specific lawyers.Retain a maximum equity stake leading up to the sale.Make sure you fully own the intellectual property.More items...•

What law applies to the sale of a business?

The Uniform Commercial Code (UCC) is one of these models. The UCC applies to sales of goods between parties. Parties in different states are constantly doing business with each other.

What should you not do when selling a business?

7 Mistakes to Avoid When Selling Your BusinessNot Being Prepared. ... Not Understanding Where A Company's True Value Is. ... Not Taking Advantage of Professional Help. ... Not Being Honest or Misrepresenting a Business in the Selling Process. ... Pricing Incorrectly When Selling a Business. ... Not Pre-Qualifying Buyers.More items...•

Who should I talk to about selling my business?

Your business advisory team may consist of: a business broker/investment banker, valuation expert, accountant, tax advisor, and transaction/M&A attorney. On the personal side, your financial advisor, estate planning attorney, and CPA/tax advisor should be involved throughout the process.

How is contract of sale made in business law?

A contract of sale can be made merely by an offer, to buy or sell goods for a price, followed by acceptance of such an offer. Interestingly, neither the payment of price nor the delivery of goods is essential at the time of making the contract of sale unless otherwise agreed.

How do you form a contract of sale in business law?

To be a valid binding sales agreement, it must include the details of what is being sold and state that the buyer is agreeing to accept the purchase. The agreement must be clearly stated. This is sometimes called the mutual assent. To be considered a valid agreement, it must include a consideration.

What should I know before selling my business?

10 Things To Do Before Selling Your BusinessGet your house in order. ... Separate different lines of business. ... Put together the right team and let them develop a plan. ... Understand the value of your business from a buyer's perspective. ... Fully understand vulnerabilities. ... Create an exhaustive letter of intent (LOI).More items...

How do I sell my small business owner?

How to Sell to Small BusinessesHighlight hidden costs. Small businesses tend to be very “literal” in the way they look at cash and their bottom line. ... Make it an “ROI” conversation. ... Remember it's about underpriced attention, not “social media” ... Host in-person events using Facebook, Instagram, or LinkedIn ads.

What happens to cash on hand when selling a business?

The simple answer? Most of the time, cash does NOT need to be an asset of the business at the time of a sale. The business owner (i.e., you) should retain any and all cash (or cash equivalents) after the sale. Surprisingly to many, this includes bonds, petty cash, money in bank accounts, etc.

How do you value a small business?

There are a number of ways to determine the market value of your business.Tally the value of assets. Add up the value of everything the business owns, including all equipment and inventory. ... Base it on revenue. ... Use earnings multiples. ... Do a discounted cash-flow analysis. ... Go beyond financial formulas.

How much is my small business worth?

The formula is quite simple: business value equals assets minus liabilities. Your business assets include anything that has value that can be converted to cash, like real estate, equipment or inventory.

How much should I sell my small business for?

Typically, the selling range for small businesses is between two-times and three-times earnings. Outliers may be multiples of one-time or less or four-times or more.

How much will a solicitor charge?

How much your solicitor will charge will depend on exactly what you require. Most solicitors bill by the hour, but can negotiate a fixed fee if it’s appropriate.

Why do I need a solicitor?

The buyer of your business will likely have a solicitor, because this is a huge investment for them and they want to get the most out of it. For the exact same reason, you need to have a solicitor. You want to make sure you are getting the absolute best value for your business you can, and are rewarded for your hard work.

How will a solicitor help my business when I sell it

We’ve already mentioned that a lawyer will help protect your assets and information by creating non-disclosure agreements for the relevant people to sign.

What decisions will a solicitor make on my behalf?

At the end of the day, the decision is down to you. If a buyer offers you an amount and you want to accept it against the advice of your solicitor, it’s your decision to do that.

Can I sell my business without a solicitor?

Yes, you absolutely can sell your business without a solicitor. However, it is not advised that you do that. As we’ve mentioned, selling a business is a complicated process, and it can be made even more complicated without the presence of a dedicated legal professional.

JMR Solicitors can help

We are experienced commercial solicitors and can help you sell your business for the best price and with minimal stress.

What Is the Best Way to Sell a Small Business?

Selling your business is a challenging task with many legal and tax implications. The best way to sell a small business is to approach the project with the end goal in mind. This may be a monetary or time-sensitive goal (sometimes both) – whatever it is, focus on it and set aside time for the process to unfold.

What Paperwork Is Needed to Sell a Business?

The paperwork you’ll need relates to proof of the business’s value and supporting documents. Any paperwork that illustrates this value will make the case for you.

What Costs Are Involved in Selling a Business?

At Your Business Lawyer, we like to try wherever possible to agree fixed fees, or capped fees, for each deal. We find that this gives our clients better certainty than an hourly rate.

How Do You Protect Yourself When Selling a Business?

The journey to selling your business is fraught with potential pitfalls. From agreeing the deal in principle, contract negotiations, and ensuring due diligence, right through to the transfer of shares and assets – the wording has got to be correct.

How Do You Value a Small Business?

Feeling confident in the value of your business pays dividends when it’s time to find the right buyer.

Legal Help with Selling a Business

Chances are, arriving at the decision to sell your business has been an arduous (and probably emotional) one. To pay service to your business and the time you invested in it, enlist the help of an expert for the culmination of your business.

What does a lawyer do when selling a business?

When selling a business, a lawyer often works with other professionals to ascertain the value of the company, what assets and liabilities exist and how best to ensure this information appears in a positive manner to the potential buyer. This means explaining the structure, the layout, the files and figures and how employees ...

Why do lawyers work for businesses?

When buying a business, the lawyer may have more work than when selling. This is to ensure that due diligence is performed and all factors are considered when purchasing the new company.

What is a lawyer contract?

A lawyer drafts contracts that the buyer or seller needs to sign with the other owner. These should have certain conditions to ensure the arrangement is beneficial, and when necessary, advantageous for both parties. When a company is accruing revenue, it is often necessary to have an accountant to keep the book up to date.

What does a business lawyer do?

The lawyer may need to contact state officials, file documents with certain agencies and obtain licenses when buying a new company. It is his or her job to protect the owner from litigation, liability and legal injury when buying or selling a company. With a business lawyer, it is possible to achieve success. Provided by HG.org.

Why is it important to have an accountant?

A lawyer is needed for interactions, contracts, documentation and various transactions, but an accountant is necessary for the financial data, numbers and funds either being obtained or when buying a new business. ...

When is it necessary to draft contracts?

Drafting contracts and editing the terms is necessary when sealing a deal with the seller. This may even mean negotiating with the seller or his or her lawyer to ensure the best terms are attached to the arrangement. The lawyer may need to contact state officials, file documents with certain agencies and obtain licenses when buying a new company.

What is due diligence in business?

The employees, agreements in place, clients, business associations and numerous other processes need to be checked out . A lawyer drafts contracts that the buyer or seller needs to sign with the other owner.

What happens if your business doesn't cause environmental problems?

An environmental issue arises and your business is involved (even if your business didn't cause the environmental problem, you may be penalized) Negotiating for the sale or your company or for the acquisition of another company or its assets.

Do you need legal help when it's too late?

But when you do, it's good to know where to find the right one. And -- more to the point -- you may not know you need legal help until it's too late, as attorneys can help you stay in compliance with the law and spot developing legal issues early.

What happens when you sell a business?

When you go to sell your business, there is a certain legal process involved that must be followed. It’s not like you can just have the buyer write you a check and then let them take over your business. There are a few legal steps to closing the sale of your business which ensures that it will be a successful transaction for both parties. Otherwise, you run the risk of facing legal ramifications after the sale if the buyer becomes unhappy with some aspect of the business that they purchased from you.

What are the steps to take to buy a business?

When you find a buyer that is ready to purchase your business, there are 2 initial steps that must be taken before the purchase agreement is signed. The buyer can legally back out of the general agreement that you have with them until they actually sign the purchase agreement.

What happens if a buyer does not know the information about the business?

Basically, if the buyer acknowledges in a legal contract that they performed their own due diligence and are still willing to proceed with the purchase of the business, they cannot come back later and claim they didn’t know certain information about the business.

What happens if a buyer defaults on a business?

Otherwise, if your buyer defaults, then you must go through a legal procedure to reclaim ownership of your business.

What happens if everything checks out from a business inspection?

If everything checks out from their inspection, the buyer will want to know if there are any outstanding legal or financial disputes with your business. This may be a pending tax audit, insurance claim, lawsuit, or anything else that may affect the profitability or reputation of your business.

How long do you have to notify creditors of a sale of a business?

This must be done within 10 days of the closing day.

Can a company sue you for due diligence?

As long as you provide them with accurate documents about your business during their due diligence process, then they have no legal grounds to sue you. All your company’s paperwork should be made readily available to any serious buyer that has signed a Letter of Intent.