Tina: As a business owner preparing to sell my business, what precautions can I take to avoid being sued?
Adam: There are a number of precautions a business owner should take before selling his or her business. The first thing an owner should do is get a forensic accounting of the business so that it can be properly valued. The second thing a seller should always remember is to get all agreements and correspondence about the sale in writing.
Tina: I financed a portion of the sale of my business and the buyer has stopped making payments on the note, what should I do?
Adam: First thing a seller should do is check the agreement and determine what options are available to the seller. If the buyer has breached the terms of the agreement, the next step is determine what course of action is available contractually. Some contracts call for arbitration and others require that a court case be filed in a particular jurisdiction.
First thing a seller should do is check the agreement and determine what options are available to the seller.
Tina: I am selling my business. The closing is scheduled next week. Unfortunately, I found out today that my corporation is not up to date. What do I do?
Adam: This can happen for a number of reasons. However, if your corporation is out of date, you should file the necessary paperwork to make sure that it is in compliance with your state’s regulations.
Tina: When should I inform my attorney that I am considering selling my business? What are the risks if I wait until I receive an offer?
Adam: You should contact your attorney immediately once the decision to sell a business is made. The attorney can help navigate all the necessary paperwork to make sure the transaction is appropriately consummated.
Tina: How would a business owner get the most out of working with an attorney? What tips do you have for working with an attorney when selling a business?
Adam: When working with an attorney, make sure that the attorney-client relationship is properly defined at the beginning of the relationship. If you only need the attorney to draft purchase & sell agreements then tell the attorney that his role in the transaction will be limited to drafting documents. The seller should also get a good proposal for the costs of the overall project and the hourly rate for the work.
When working with an attorney, make sure that the attorney-client relationship is properly defined at the beginning of the relationship.
Tina: What resources do you use in your practice to help you successfully represent your clients? For example, do you rely on paralegals, other attorneys, accountants, financial planners, any other professionals?
Adam: It depends on the matter at hand. In the sale of a business, the best attorneys will work with forensic accounts to evaluate the business, financial planners to help invest the money received from the sale, and accountants to help navigate the tax consequences from the sale of business. The attorney will generally help make sure all of these professionals work together.
Tina: How do you manage your team, such as paralegals and legal assistants? What role does each play in helping your client?
Adam: My team has a very high ratio of attorneys to paralegals (we do not use legal assistants). With any team, you want to make sure you are only working with bright contentious individuals who can handle any task assigned to them.
Tina: What are some of the most imaginative and creative things that you have done for a client in relation to buying or selling a business?
Adam: In the sale of a waste management company we were able to sell a company by lending the buyer shares in the company that were paid back in such a way to lower the seller’s tax consequences over time.
In the sale of a business, the best attorneys will work with forensic accounts to evaluate the business, financial planners to help invest the money received from the sale, and accountants to help navigate the tax consequences from the sale of business.
Tina: What was the toughest problem regarding buying or selling a business that you have handled recently?
Adam: The hardest situation is obviously when the business is being bought or sold by family members because with family there are usually personal issues that affect both sides ability to think clearly and rationally.
Tina: Do you have an interesting story regarding buying or selling a business?
Adam: Many times when a seller approaches us after the sale has already occurred and a number of interesting issues arise. One time, a buyer completely failed to pay the amount owed pursuant to the agreement and we had to sue the buyer in court. This issue could have easily been avoided with the proper protections in place at the onset of the transaction.
Tina: In your view, what are the major problems facing your industry?
Adam: The major problems facing sellers of businesses is the amount of detail and paperwork associated with the sale. The bigger the business, the more issues the seller will face.