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Looking to purchase my first business (existing.) I have spoken with bank and broker but should I get additional representation?

Seattle, WA |

Formed my LLC in August, acquired EIN through IRS, using site as a guide in writing business plan, have read several books on the subject. I am under the impression that the business broker should do their dilligence with contracts and landlord but unclear.

Attorney Answers 4

  1. Hi, I hope I understand your question correrctly. You are wondering if you should get additional representation in the context of your business acquiring another business? If that's your question, my advice is that you should highly consider retaining legal counsel to help you conduct due diligence, decide on the best way to acquire this new business and to help you negotiate the sale agreement. The bank and business broker provide their own specific expertise, but their interests will not be 100% aligned with yours in that the broker (if it represents the seller) has the seller's interest at heart. A lawyer hired by you is obligated to work only for you and only in your best interest. Do your research and make sure that you hire a business lawyer with experience in buying and selling businesses.

  2. I agree with the prior answer. If you're in the process of acquiring (or selling) a business, you should consult with a business attorney to assist you in the transaction. There are several legal (and tax) considerations when acquiring a business.

    An attorney can assist drafting the necessary documents, as well as advise you on the best strategy for structuring the sale. I would highly recommend consulting with a business attorney prior to moving forward with this transaction.

  3. What a lawyer normally does is review the contracts that you are aquiring including the lease. He or she may review the loan documents and -- depending on the nature of the company being acquired -- lawyers may review employment agreements, retirement plans, and almost anything that is written. Sometimes the seller is required to provide a legal opinion from its lawyer and the buyer's lawyer reviews that. Sometimes the buyer's lawyer looks into land use issues or some other specific matter. The more money involved the more the buyer typcially involves lawyers. So there are a lot of variables. The amount of money involved in the transaction is perhaps the single most determinative factor, that, and the degree of sophistication of the buyer and the buyer's comfort level with the transaction and the parties..

  4. As my colleagues pointed out, an experienced business acquisitions attorney is critical both in terms of identifying (via due diligence) and mitigating (through structuring & agreement drafting) legal risk. On the structuring & drafting side, carefully reviewing various forms of payments such as earn-outs, seller notes, holdbacks, etc. can help you strike the "right" deal to fit the situation and keep $ in your pocket for working capital. The other thing I would add is that having an experienced CPA involved in the planning and execution stages is key, as is their ability to work well with your chosen business attorney. Good luck, DC

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