Collaborative Teamwork in Business Transactions – Part 2
For many small business sales, particularly those of any complexity, the ideal scenario may involve both a business broker and a business lawyer, acting in complementary roles where collaboration ensures you get the best terms and price:
- The broker gets you to the negotiation table with a qualified buyer and a strong offer.
- The lawyer ensures that once you’re at the table, the deal is legally sound, protects your assets, and minimizes your future exposure.
A good broker will often recommend a business attorney, and an experienced attorney will appreciate the groundwork a broker lays in finding and vetting buyers. Their combined expertise ensures you achieve the best possible price while navigating the complex legal landscape of a business transfer.
The team of business attorneys at Free Vector Advisors provides the services you need in business sales, backed by years of experience as lawyers and business owners.
Call our corporate lawyers to request a consultation.
When Does Business Transaction Size or Complexity Influence Your Choices?
The size and nature of your business sale may significantly impact whether you primarily need a broker, a lawyer, or a comprehensive team:
- Very Small Businesses (e.g., under $500,000 purchase price, simple asset sale, no regulatory issues, few employees): For the simplest of transactions, some sellers might consider using a broker to find a buyer and handle initial negotiations. However, even here, a business lawyer is still highly recommended to draft or at least review the purchase agreement and ensure legal compliance. The cost for a lawyer for a simple asset sale might be done on a fixed fee basis and will more than likely pay for itself through the mitigation of potential legal issues.
- Small to Mid-Sized Businesses (e.g., $500,000 to $5 Million or more purchase price, more “complexity”): For a business transaction where all or part of the purchase price may be contingent or paid in the future on an “earnout” basis, or where stock is being acquired as opposed to assets, or where there are significant number of employees and contractors, or the business is in a regulated industry or where the buyer insists on an agreement beyond the standard commercial brokerage purchase and sale agreement, consider a collaboration with your business broker and your lawyer. The broker will handle the marketing, valuation, and buyer sourcing, and initial purchase price negotiations, while the lawyer is better suited to handle the more complex legal documents and negotiation, due diligence, regulatory and compliance issues, and risk mitigation.
- Larger or More Complex Businesses (e.g., over $10 Million purchase price, multiple entities, significant legal issues). As the transaction size and complexity increase, the need for a highly specialized team becomes paramount. At this point, you may be better off engaging an M&A Advisor or investment banker to handle the more complex financial, tax, and deal structure issues that are going to be beyond the expertise of most business brokers, and a business lawyer with a high level of mergers and acquisitions expertise and experience.
In cases that involve large, complex business transactions, the corporate lawyer’s role becomes even more critical in:
- Structuring the deal for optimal tax efficiency (e.g., asset sale vs. stock sale).
- Substantial and time-consuming due diligence and information disclosures.
- Dealing with complex legal, business, and regulatory issues such as pending or threatened litigation, regulatory compliance, intellectual property, environmental, data privacy, confidentiality, tax, ERISA, and other highly specialized legal issues.
- Navigating complex debt assumption or financing arrangements.
- Addressing corporate governance issues and large numbers of shareholders holding different types of equity or debt investments.
- Coordinating with other specialists, like accountants or tax advisors.
Small Business Sales with Free Vector Advisors
Whether your business sales transaction is small or large and complex, the business lawyers at Free Vector Advisors can stand by your side and provide vital legal counsel and services. Some business transactions can benefit from both a broker and a business lawyer. Our team can provide counsel and discernment for what is best for your business. Let us help you with corporate legal services and expert business advisement.
Call Free Vector Advisors for legal support for business sales transactions in Palm Desert.