Tina: From a legal standpoint, if I am looking to sell my business, where would you suggest I start the process?
Jamie: I would suggest that you hire an attorney, and possibly a business broker to find a buyer. Of course, the broker will charge you a commission, but they have the connections to find you a buyer. From a legal aspect, it is important to have a lawyer lined up in order to make sure paperwork is in order, and everything is being done legally.
Tina: What disclosure obligations do I have to a buyer when selling my business? Am I legally required to tell him all the bad things about my business?
Jamie: You are required to give accurate information, as well as provide tax returns and other financial forms. I have seen many lawsuits when the books have been “cooked,” or false information has been given, and it always turns around and ends badly for the seller. Sellers are given some lee-way to puffer their business, to make it sound good, but they ca not tell intentional mistruths, as that is fraud, if the buyer relies on the false statements to their detriment. Lastly, at the closing, the seller has to sign an affidavit that the company is in good standing and that the documents submitted are accurate, which will protect the buyer to a certain extent.
I have seen many lawsuits when the books have been “cooked,” or false information has been given, and it always turns around and ends badly for the seller.
Tina: I own a small business as well as the land it is on. The business is on half of the land. However, I own the land with my brother and he does not want to sell his half when I sell the business. What are my options?
Jamie: That is a tough situation. The first thing to do is attempt to work out a deal with you brother, as amicable settlements are better than lawsuits. If that fails you can sue for a partition of the property, as the owners are in a dispute and it is a deadlock. To obtain a partition you will need to prove to the judge it is in the best interests of the parties to sell the property.
Tina: What constitutes a billable hour? Are these fees negotiable? How would an entrepreneur go about negotiating fees with her attorney?
Jamie: A billable hour is the hourly fee an attorney charges for his work. These fees are negotiable, but most lawyers do have a range they will stay in, which is based on their expertise and the type of work being performed. An entrepreneur should ask the lawyer his fee, and then if he thinks it is too high ask him to lower the fee. As anything, it is all about compromise, as the lawyer needs to be paid for his services and the client needs to feel that he is getting a fair price.
Tina: What are the most important things that an attorney can contribute as I sell my business?
Jamie: The attorney can help to make the selling of the business as easy as possible, as well as make sure that the seller ends up with no liability, and making the sale go as fast as possible. Even small sales of businesses should have a lawyer involved, as it is important to make sure the process is done properly and that at the end of the day the seller is done, gets their money, and sells the business.
Moreover, the lawyer can assist in the process regarding tax savings and 1030 B exchange. This is where you can take the profits from the sale of a building, and then put those into another building, and you can save the taxes.
Even small sales of businesses should have a lawyer involved, as it is important to make sure the process is done properly and that at the end of the day the seller is done, gets their money, and sells the business.
Tina: What aspects of a job do you consider most important when assisting an entrepreneur buy or sell a business?
Jamie: I think the most important thing is making sure that all the liabilities are paid off, and that the buyer or seller gets what they bargained for. Of course, both sides want the best deal possible, and for the deal to close quickly and efficiently. A lawyer can make all of these things happen.
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?
Jamie: I have done it all, I have negotiated for a seller to sell only a part of a company, to get some revenue, made the buyer a co-owner, and when the buyer saw how well the company was doing, with the co-buyer involved, then the buyer bought the rest of the business out.
Tina: Do you have an interesting story regarding your specialty or buying/selling a business?
Jamie: Yes! I once represented a woman selling a day-care. She was saddled with IRS liens and liens on her buses. I was able to get the IRS and the lienor of the buses to take a small fee, get a reduction in the amounts owed, and get the property sold. I was also able to convince the IRS and the lienor that if they did not allow the sale to go through, that they would end up with nothing but a bankrupt business!
The attorney can help to make the selling of the business as easy as possible, as well as make sure that the seller ends up with no liability, and making the sale go as fast as possible.
Tina: Do you have any other tips or advice for anyone buying, selling or appraising a business?
Jamie: Most important, do your due diligence; do not rely on the word of friends or the person selling the business. Get your own appraisal, and really look at the numbers. Too many times numbers are presented in a way that is deceiving, so it is important that due diligence is done to make sure the deal is good and that money will be made at the end.