As a business owner starting from scratch, one of the first things you have to do is acquire a company. But before buying an existing business, there are some considerations that you need to make. One of the essential things in transactions like these is having good representation by experienced legal representatives or attorneys who will look out for your interests.
The transaction, in general, will have legal implications, so it is best to hire a lawyer who will provide you with the necessary advice. You need to know that there are two types of lawyers when referring to business transactions:
Transactional attorneys Litigators.
Transactional attorneys are more determined to ensure that all pertinent documents make the transaction as smooth as possible. On the other hand, Litigators are more concerned with protection from lawsuits that may arise from the transaction.
Lawyer for business transactions:
When it comes to business transactions, transactional attorneys are usually preferred by clients because they can provide legal advice on almost all aspects of the transaction. On the other hand, Litigators are usually called when there is a dispute that has to be settled through litigation. Due to this difference in coverage, clients need to know their needs to choose the best representation for them.
Both transactional and litigator attorneys have different specialties, so it is best to find one specializing in the kind of transaction you have. There are a lot of lawyers out there, some more experienced than others. In finding the right lawyer for your business purchase, always remember that experience counts.
You need to investigate the background of potential lawyers, including their educational background, work experience, and their certifications. You can do this by asking for references or calling groups they are members of to find out if they are known in the legal community.
What lawyer do I need to buy a business?
The knowledge, capabilities, and skills of the lawyer you will need to buy a business would depend on the type of business you are looking to acquire. The general qualifications for a practicing attorney entail at least five years of practice in one or several areas of law.
For small businesses like sole proprietorship (not more than 10 employees), small partnership (five members or less), small corporation (20 employees or less), business owners may be able to hire a lawyer who is willing to take their case on a contingency basis.
A large part of the practice in these businesses involves transactional work, which means that the lawyer gets paid when you do, i.e., through fees upon closing transactions or by earning interest from an escrow account.
In larger businesses, owners pay the attorney by the hour at a rate of around $200 an hour goes up to $1,000 an hour for a complex litigation matter. You should expect significant company matters to take longer than small ones – which means that you should hire an attorney with experience both in the type of business legal services required and also in the industry.
Knowledgeable attorneys tend to charge more than those who are new to law or not experienced enough because expertise demands specific fee rates. If you employ an inexperienced but brilliant young lawyer fresh out the bar, they would usually work for lower rates, but they will require more supervision.
As you would expect, the best way to find a lawyer is by referral, i.e., from someone who has used the services of that particular attorney in the past. You may also want to see if your state bar association member directory provides names of lawyers willing to consult at reduced rates or offer special introductory rates for new clients.
What legal documents do I need to buy a business?
You cannot buy or sell a business without first transferring ownership through legal documents. The transaction will include at least one lawyer, who can advise on the warranties and warranties of title (i.e., promises the seller makes about the state of things), contracts for the sale of goods, bills of sale, bill of lading, bills of exchange, promissory notes, leases, licenses, articles of incorporation, etc.
The document that will affect your rights is the contract you will use to acquire the business assets. It serves as evidence that all parties involved agree upon the validity of whatever it relates to, i.e., sale price, warranties, and other matters relevant to the deal. The more detailed this contract, the less likely to have any problems with it in the future.
In addition, at least one lawyer is necessary when you buy a business because you will need legal advice on matters such as employment contracts, leases for office or commercial property, and other issues that may arise during the sale of goods.
What are the steps to buying a business?
When buying a business, at least five significant steps must be completed by all people involved.
1) Make an offer to buy, purchase contract signed and deposit paid.
2) Prepare the legal documents required for the purchase of the business
3) Check the availability of funds to pay for transaction costs and due diligence expenses.
4) Make sure that all legal requirements purchase business
5) Complete the business purchase by paying any remaining balance and recording documents at the relevant authorities.
What qualities of lawyer do I need to buy a business?
Here are some of the essential qualities which you should consider while referring a lawyer to buy your business:
-attorney/lawyer who is an expert in the type of business you want to buy;
-an attorney with experience in the specific industry; and
-a lawyer with knowledge and skills in transactional law (transactional attorneys tend to charge more than litigators because they work with clients regularly and know them well enough to be able to request lower fees).
What if I cannot afford the services of a lawyer for my business?
If you cannot afford the services of an experienced lawyer, then you may want to consider hiring a legal document assistant or paralegal, which would cost considerably less. Paralegals are not allowed to provide legal advice. Still, they can assist with routine tasks like drafting legal documents, providing client intake services, conducting legal research, and reviewing legal documents.
You may also want to consider consulting a non-legal professional versed in the business industry for business-related matters, i.e., an accountant or consultant. Non-legal professionals can prepare business documents, create bylaws or articles of incorporation, draft employment contracts and provide general advice.
But remember that you would need a lawyer’s assistance in the final stages, i.e., when it comes to closing transactions because they are required for legal documents to be valid in court. An accountant cannot represent you in court or sign a document as a lawyer, i.e., they cannot provide legal advice or assume representation of clients who are unwilling, unable, or unavailable to provide it themselves.
Do I need only a lawyer to buy a business?
In some cases, you may need both a lawyer and an accountant to take care of business-related matters because certain transactions require the services of both professionals. For example, if your business deals with financial or tax issues, you would need to hire an accountant. However, if your business deals with contract law, intellectual property rights, or litigation matters, you would need the services of a lawyer.
You will also require the services of different professionals depending on whether your transaction is structured as a stock or asset purchase because different responsibilities are involved. If you are buying a business as a stock purchase, then you would not need an attorney or accountant because the assets of the business being sold will remain in place, and only the company’s records will change hands. However, if your transaction is structured as an asset purchase, you must ensure that all contracts and leases are assigned to you.
Some contracts and leases may require consent, so you need to work with an attorney to identify these documents.
The cost of hiring professional business-related services varies depending on the expertise, experience, and legal knowledge required for a particular task. However, if you are looking for quality yet affordable services, then referrals are your best bet. It would be best to consider hiring a paralegal or legal document assistant to assist you with routine tasks.