What to Know About Business Acquisition Law
At its most basic, business acquisition law governs the buying and selling of businesses. On the surface, these transactions seem simple; after all, a seller offers their business for sale and a buyer either agrees to the terms, or they don’t. If they do, then the two parties enter into negotiations, leading to the drafting of a purchase sale agreement and other documents as the transaction approaches finalization.
But acquisitions are rarely that simple; any business attorney is likely to tell you that the list of contingencies and clauses can grow exponentially as offers and counteroffers are created. There are different ways to structure the sale and purchase, different financing options, different rules and regulations depending on the type of business involved, and more. In addition to the primary purchase sale agreement, which is often only the first of many contracts required by the transaction, there might also be documents covering issues such as licensing agreements, lease agreements, tax ramifications, contexts regarding the sale of products or services.
On top of that, your business acquisition attorney must also advise you on reporting and tax purposes. The legal structure of the sale will change your tax liability during the sale process itself and for years to come . Areas such as equipment and inventory valuation and appraisals, stock and derivative compensation, financial history and due diligence, representation and warranties, and post-closing obligations must be handled during the transaction to ensure the well-being of your business in the years to come. For buyers, earnest deposit money agreements, asset protection, and debt relief for your company’s previous owner must all be handled, taking the full picture into account.
As a prospective client for a business acquisition attorney, you should understand the possibilities of a merger, acquisition, or other business transfer. For instance, you should know the difference between asset sales and stock sales, the former dealing with the transfer of tangible items like equipment to the new owner and the latter dealing with the buyer purchasing shares of the seller. You also need to understand the various methods of financing a purchase, the most common of which are debt financing, equity financing, factoring, asset-based financing, and venture capital. You may also want to look into the pros and cons of various business organization structures, such as sole proprietorships, partnerships, C Corporations and S Corporations, and limited liability corporations (LLC).
A business acquisition will impact your enterprise both now and far into the future, so you should work with the best acquisition lawyer available to ensure your interests are protected.
Advantages of Working With a Localized Business Acquisition Attorney
Finding the right business acquisition lawyer near you can have many advantages. In addition to understanding your business industry and its unique needs, a local lawyer has knowledge of local laws and regulations that may differ from those in other jurisdictions. This familiarity can help ensure compliance with legal requirements and avoid unexpected issues during the acquisition process.
In addition, a local attorney will have a better understanding of local market conditions for your business type and may have contacts that can help facilitate the acquisition process. They will also understand the competitive landscape in the area and can provide valuable advice on how to position your business to best advantage to increasing its value and a successful acquisition.
Having your lawyer as a local contact will also improve the efficiency of the acquisition process. They will be easily available to assist with matters that need to be addressed quickly with other parties. This will also reduce any time wasted trying to find an attorney who is focused on the acquisition process and who has the required experience in business transactions.
How to Locate the Perfect Business Acquisition Attorney
Practical steps to identify and select a business acquisition attorney would be to consult the Bar Associations and their websites for attorneys that have identified themselves as having this primary area of practice. Additionally, many lawyers in private practice list their area of focus on their website or blog. Other helpful resources are legal directories which can be accessed on-line or purchased in the form of a printed directory. Many state bars provide searchable databases of attorneys practicing in that state.
Referrals from friends, families, business associates, and other professionals are other good sources to find a qualified business acquisitions attorney. We recommend asking other business owners for referrals that may have experience with an attorney in this area.
If you have identified attorneys by these means, you should check their credentials, experience and then interview them to ensure that they have the proper expertise in this very important area of law so you are protected in your legal affairs.
Inquiries to Consider Asking Your Business Acquisition Attorney
What types of transactions have you handled before? Identifying the background of the firm that you will be hiring is critical for making an informed decision. Be sure to ask them if they have handled the type of transaction that you are looking to complete. To what extent have you assisted with business acquisitions in the past? Acquiring a business can come with certain unexpected challenges. It is important to ensure that the attorney you work with has experience and is able to assist you with the challenges you may face. Do you have any examples of successful cases? If the attorney has successfully acquired businesses like yours in the past , there is a good chance they can do it again. Make sure that you ask them for their pertinent case history. How do you keep your clients informed throughout the acquisition? One of the best things you can do as you prepare to work with an acquisition attorney is to listen to their communication style. Be sure to ask how they will keep you informed of the progress of your acquisition and make sure it fits with your needs and preferences.
Ready for Your First Consultation
The success of your meeting with a business acquisition attorney will depend largely on the steps you take beforehand. Arriving at your initial consultation without the facts necessary to discuss your options will likely prove frustrating. After all, you’re asking an attorney for guidance on a technical matter; he or she can only guide you if they understand the issue at hand. So, before meeting with an attorney, do yourself a favor by getting your affairs in order.
Here are a few practical tips to keep in mind when getting ready for your first meeting: Compile the facts needed for your case. The exact information your attorney will need will vary based on the specifics of your case, but there are certain things you’ll always be asked. When making the appointment, let the attorney know what sort of transaction you’re planning, and be sure to familiarize yourself with the company you’re preparing to acquire.
If you’re unsure what facts need to be compiled, you can always ask the attorney’s office for guidance prior to your appointment. This is very helpful in focusing your research and ensuring you have the pertinent information at your initial consultation .
There’s a good chance you’ll need to bring a few documents along to your first meeting. Ask your attorney’s office ahead of time for a list of needed documents, whether that’s by phone, e-mail, or the firm’s website. Typically, your corporate agreement, tax returns, and any other legal information about your company or the company you’re acquiring will be vital.
You should also bring along a specific outline of your business objectives. What are you trying to accomplish with this business transaction? Are you looking to further expand your company? Is this purchase an investment opportunity, or a small addition to your portfolio? Try to avoid convoluted business objectives, as these can confuse the process and leave everyone scratching their heads. Instead, find creative ways to explain your situation, whether that’s through an outline or a personal presentation.
Your attorney may have a specific way they want you to explain your case to them. This could include bringing along slideshows or outlines of your situation, or simply telling them how you want your business to function in the coming months and years. Asking beforehand ensures that you both say the same thing in the first place.