There are usually a few key professionals that make up your deal team when you sell your business: the business broker, accountant and attorney. You should be vigilant in choosing any and all of these professionals because they can make or break your deal. When it comes to choosing a transaction attorney, there are few things you should keep in mind.
1. Experience and knowledge
The most important factor in choosing a transaction attorney is what kind of experience and knowledge they have. You want an attorney who specializes specifically in transactions of this nature for small and medium sized businesses. Large M&A transactions are a completely different ball game, and the attorney should be able to discern this and work and advocate accordingly.
The attorney needs to understand the transaction process. Amongst other things, the attorney should know the following:
• How to read financial statements that are pertinent to the transaction
• How the lending process works, especially the SBA lending process
• How to allocate the purchase price
• How to negotiate commercial leases
2. Access to Specialists
There are issues that will arise during any transaction that will require consultation with other professionals. Working with a law firm that covers multiple disciplines is always a big advantage; your attorney can simply consult with internal resources to ensure the best possible outcome. At a minimum, your attorney should have access to and connections with specialists that can provide advice should your deal require that type of expertise. A complex deal structure might have an impact on your legal liability, tax liability or some other aspect of your deal, so it is critical to know that your attorney can adequately handle that situation and be willing to call on a specialist.
The attorney you choose should be able to address your concerns and walk you through the steps as needed while respecting the decisions you make. You want an attorney that will promptly answer your questions. The attorney should keep you informed about what’s going on with the transaction and touch base with you regularly.
4. Sense of urgency
The attorney should have a sense of urgency when it comes to completing the transaction. Having this urgency will help move the deal along and swiftly smooth out any issues that arise. This means that the attorney should know which issues to target and should respond in a timely fashion to communication. Time is an important factor in any transaction; all parties in a transaction start to lose steam when the process is being dragged out longer than it should be. Essentially, time kills deals, and it is important to maintain momentum until the transaction is completed.
5. Willingness to work with the team
As mentioned before, your deal team is made up of multiple professionals. All these professionals need to work together to complete the sale of your business; an attorney is no exception. The attorney you choose must be able to work with you and the other members of the team proficiently to understand your objectives and determine what the right moves to make are. Without this fluidity in agreement, issues and misunderstandings will arise that will stall the transaction and perhaps even kill the deal.
6. Right price
The attorney should be the right price for your transaction size. You should know what the attorney’s fees are before you begin working with him. The fees should be reasonable and should not be prohibitive when compared the size of the deal. Of course, complexities may arise that were not anticipated which might increase the cost, but there should always be transparency about the work that needs to be done and the corresponding fees.
An attorney is an important member of your deal team as you sell your business. Make sure that you research and ask the right questions before you hire the attorney. Having a reliable and trustworthy attorney will facilitate the transaction process and put you at ease.
If you are looking to buy or sell a business, email us at [email protected] or call us at (773)-243-1603 to discuss the first steps.