This is a blog based on a telephone interview with Hanwei Cheng , senior Counsel of Ed Lee Law Group PC in Los Angeles, California. Click here to listen to the full telephone interview. In this blog, we get the answer to the most common question: why do I need to hire an attorney? Most people think hiring an attorney is only necessary when there is a problem. However, the best time to seek an attorney’s advice is when you are starting the process of selling your business, when you are thinking about buying or starting a business, and before there is ever a problem.

Most business owners who end up in lawsuits thought they had everything under control. As an attorney, I see this time and time again; a business owner who thought they understood the terms of the sale, but are now being sued because of the “fine print”. As an attorney, what we do best is problem solving, so we can anticipate certain contingencies that may arise and we try to prevent those issues before they actually happen. Once those issues arise, that's when hiring an attorney becomes expensive. By then, the business owner has found himself knee-deep in litigation and hiring a litigation attorney is costly. However, when you hire a transactional attorney, one who helps oversee the process of selling a business, who can help with documents, and who can foresee future issues and help prevent problems that may arise that could eventually lead to litigation, you are looking at a much lower cost. A lot people think they have everything under control, but then, all of a sudden, there is an unexpected dispute with employee or some sort of dispute with a landlord and

Licensing – The big limitation. Because most buyers of businesses do not have the proper licensing to operate a financial planning business, they may not be suitable candidates. If your business requires a Series 7 license, then it is best to target individuals who already hold these designations. If the licensure is fairly easy to obtain, the business will be much easier to sell.

The two ways to sell a business
  • The hard way – The hardest and costliest way to sell a business is to target buyers directly. This is necessary when a specific type of buyer is the ideal candidate for your business. For example, only a surgeon can purchase a surgery practice; only an architect is likely to buy an architectural practice. Because most business owners are busy operating their business and are not in the market to purchase another business, targeting specific buyers directly can be costly.
  • The easy way – The most cost-effective way to advertise a business for sale is to advertise it using business-for-sale websites. These websites often get monthly traffic well into the millions of qualified buyers who are aggressively seeking to buy a business.