Why You Should have an Attorney Assist You When You Buy or Sell a Business

By Michael Safren, Esq.

If you are thinking of buying or selling a business or a piece of commercial real estate you may have wondered if you should have an attorney to assist you in that process. Afterall, consulting with an attorney can add cost to the transaction.

Buying or selling a business or a piece of commercial real estate can be a complicated transaction involving assets, obligations, and property rights. These transactions often include leases, tenants, real property, equipment, intellectual property, customer lists, employees, receivables, payables, licenses, and taxes.  Each of these elements may have long-term implications for you whether you are the buyer or the seller and can result in risk, liability, and continued obligations depending on how the transaction is structured.  

For example, does the business rely upon a license that may not be renewed if the owner(s) separate from the business? Will the selling owner(s) be obligated to continue to work or operate in the business that is being sold? Are the intellectual property such as logos, copyrights, patents, trade secrets, and trade names owned by the  business and will all the intellectual property be transferred in the transaction or will some intellectual property be retained by the selling owner(s)? What metrics and mechanisms exist to ensure a smooth and successful transition?  What are the specific terms of any business obligation that the buyer will acquire such as leases, business debts, vendor contracts, insurance policies, or pending lawsuits? Will the selling owner(s) be bound by a non-compete agreement or non-disclosure agreement?

Failing to clarify these questions and more could result in either buyer or the seller being burdened with liabilities, obligations, or risk that they might not have intended. The obligations are often long term and costly if not upheld.  Failure to properly and expressly allocate the assets within the purchase and sale agreement could result in the either the buyer or seller not acquiring or not retaining some of the high value business property that they expected.

An attorney can assist either the buyer or the seller to consider and understand these issues.  Further,  an attorney can help negotiate and draft the terms of the agreement to ensure that their client is insulated from risk and liability and ensure that the assets that are being purchased or sold are expressly contained within the agreement.  Moreover, an experienced attorney can help connect you with the experts that you will need to assist in you the transaction including accountants and business appraisers.

After your agreement is executed, an attorney can ensure that any documents that need to be recorded such as titles to real property are recorded.  An attorney can also help ensure that all funds are exchanged and  distributed properly.

When you are contemplating buying or selling and business or piece of commercial real estate, hiring an experienced business and real estate attorney can save you time, effort, and money.  They will assist you in performing the  due diligence, examining the facts objectively, and guide you to ask the right questions so you focus on what you care about most – your business. If you are thinking of buying or selling a business or commercial real estate, Contact Us to help ensure that your legal interests are protected.

Michael Safren is a Partner at The Law Offices of Jenny Ling, PLLC.  His practice focuses on probate, business, real estate, and civil litigation.