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Tools at Your Disposal When Buying and Selling a Business – Lawyers

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Considering buying or selling a business? Lawyers play an important part in the process, and I strongly urge you to bring in a lawyer to represent you during this process. They are an important tool in your belt that can keep you and your business out of harm’s way when used properly.

However, when used improperly, they’ll kill any deal and prevent you from obtaining what you want – which if you are looking to buy a business is either to:

How NOT to Use a Lawyer

What does it look like when you use your lawyer incorrectly? You don’t want to start with a statement that goes something like this:

“I’ve been talking to a broker, and I’m considering buying [Company ABC]. What do you think?

Repeat after me. You do NOT go to a lawyer for business advice. If you are considering making a major move, like buying a business, lawyers are world-renowned for being able to talk you out of it.

Liquified Creative Annapolis

Not there. But if I’m painting in broad brush strokes, a lawyer would love to see you wrapped up in a protective coating like “Bubble Boy” from Seinfield – but maybe with an elliptical in there for low impact exercise and meals delivered that are perfectly portioned -controlled.

They’ll regale you with stories about all the ways the purchase could go wrong. Mind you; they won’t touch on any success stories. And they won’t tell you about the potential benefits.

A Better Approach

A better approach is this. Do your due diligence on the opportunity. If you have one, ask a business mentor about the opportunity. If you don’t have one, reach out to SCORE or one of Maryland’s Small Business Development Centers.

Speak to a bank and try to understand what your cash flow would look like.

Make a good, informed decision. And if it is to buy, go to the lawyer with the following approach:

“I have made the decision to purchase (company name) because it will allow me to (grow/add additional services/be my own boss). I would like to close by (closing date). Now, tell me, how can you help protect me during this process.”

The important things in the above statement are the following:

  • The decision has been made. It isn’t a question.
  • Identify the reason for the decision.
  • Identify the timeline for the deal.

As far as the structuring of the deal and the timeline, that’s what your broker is for. We have information regarding the pricing of the business. We see how the business can and will fit in.

What we need from the lawyers is to review specific documentation; including but not limited to:

  • supplier agreements
  • leases
  • Franchise Documents
  • Business Sale Agreement
  • Business Bill of Sale

If you’re using them to review, justify or sign off on anything else in the deal, you’re using them incorrectly.

please note

Annapolis is home to many very good lawyers who I like working with a lot. If you need legal advice for your business, I would strongly encourage you to reach out to:

  • Steve Brown, with McAllister, DeTar, Showalter & Walker LLC, [email protected]
  • Brian Burkett, with Council Baradel, [email protected]
  • Jimmy Praley, with Lessans, Praley & McCormick, [email protected]
  • Gregory Currey, with Luchansky Law, [email protected]

I like all 4 of those lawyers because they are interested in being part of the solution, not being roadblocks to progress.

If you are looking for business mentorship, I encourage you to reach out to John Robinson, Sr. with SCORE. He recently gave a presentation on SCORE with the Crofton Chamber of Commerce, and it was amazing. John can be reached at [email protected] or [email protected].

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