Why do you need a lawyer when you buy a business?
When purchasing a business, it is critical to have an experienced legal professional on your side. They will work with you through every step of the process to ensure your success.
What will an attorney do?
A good lawyer will take the time to discuss your goals and motivations, as well as conduct extensive background checks on the company and its employees.
When you’re ready to buy a business, a lawyer can help you with the following:
Conduct due diligence and background checks on businesses.
Establish timetables for stocktakes, inspections, and settlement.
Contracts and other legal documents must be written and reviewed.
Make a deal with the seller.
Supervise the incorporation and structuring of entities.
Organize employee transition and benefits.
Make intellectual property transitions easier.
Examine any tax obligations.
Property, leasing, and licencing requirements must be managed.
According to Nick Rimington of law firm Norton Rose Fulbright Australia (NRFA), when a lawyer handles these details, you, the buyer, can focus on other aspects of the transaction. He also suggests that you seek independent financial advice from an accountant before making any decisions.
What if you don’t hire a lawyer to help you buy a business?
A good lawyer will have business acquisition experience that a first, second, or even third time buyer may lack. According to Nick, if you choose not to hire a lawyer, you are putting yourself at greater risk. This could include purchasing a shady business, overpaying, future contract disputes, or entering into a deal that is not in your best interests.
“Without the assistance of a lawyer, a prospective buyer is unlikely to have a comprehensive understanding of the business, its assets, and its liabilities, leaving them vulnerable to hidden risks and obligations,” Nick says.
Should you hire a lawyer if you’re buying a business?
Nick advises you to consult with a lawyer as soon as you find a business that interests you. You’ll have someone with legal knowledge looking out for you from the start.
Engaging a lawyer from the start of your business purchase journey, rather than in the middle, is the best idea, according to Nick. Having a lawyer on your side from the moment you find a business you like ensures that your interests are protected from the start.
Where do I begin?
Before you hire a lawyer or even decide on a business to buy, Nick recommends creating a wishlist of the things you want as part of your business transaction. A checklist provides you with a clear vision and makes it easier to see if a business meets your needs on paper.
When you’re ready to involve your lawyer, they can assist you in accomplishing the items on your wishlist and using it as a guide throughout the business transaction. A good lawyer will also be able to recommend other “must-haves” and help you set realistic goals for things that may be difficult to achieve.
Remember…
Purchasing a business can be complicated, and the devil is frequently in the details. Involving a good lawyer who can help you work through the fine print, investigate the business, and understand any confusing jargon can be extremely beneficial.
You’ll give yourself the best chance of business success if you take the time at the beginning of the buying process to secure solid legal and financial support.
