Selling a business isn’t just about finding the right buyer; it often involves legal and financial complexities that can complicate the process.
To ensure a hassle-free experience, many business owners consider hiring an attorney.
However, many entrepreneurs still wonder whether they should involve a lawyer in their business sale. One common question I hear is: Do I need a lawyer to sell my business?
In this article, we’ll explore:
- Whether hiring a lawyer is necessary when selling your business.
- When it’s essential to hire one and when you might manage without.
- How to find a skilled attorney to guide you through the process.
So, Do You Need a Lawyer to Sell Your Business?
Perhaps. Or maybe not.
Hiring an attorney is generally a wise choice when selling your business, especially for larger or more complex transactions. Attorneys can handle the detailed legal work, such as drafting contracts, ensuring compliance with local laws, and identifying potential liabilities. Business owners who work with lawyers typically face fewer risks and avoid costly mistakes.
However, there are exceptions. For example, if you have a background in business law or are handling a small, straightforward transaction, you might decide to skip hiring a lawyer. In such cases, a business broker or simple legal templates may suffice.
Still unsure?
Let’s explore why you might consider hiring a lawyer for your business sale.
Why a Lawyer is Important When Selling Your Business?
1. For drafting and reviewing of contracts
A lawyer ensures that critical agreements, like stock purchase agreements, asset purchase agreements, and non-compete clauses, are solid. Even if your buyer drafts these documents, an attorney will carefully review them to catch any terms that could come back to haunt you.
I’ve seen a couple of sellers ignorantly sign a non-compete agreement without legal advice. Little did they know that a clause in the agreement barred them from starting a similar business for many years—longer than they anticipated. You surely don’t want such an experience.
2. To protect your intellectual property
You need to safeguard your trademarks, patents, and proprietary information during a sale. An experienced lawyer will ensure your intellectual property is clearly defined in the transaction and protected after the sale.
3. Easier negotiation
Lawyers often act as neutral third parties during negotiations. They’ll advise you on what value is negotiable and what’s non-negotiable. In many cases, attorneys help sellers secure better deals by advocating for terms they (the sellers) didn’t even know were negotiable.
4. Less legal risks
Without a lawyer, you risk signing contracts with unclear language or terms that might expose you to legal problems in the future. An attorney helps protect your interests, making sure the documentation and processes align with the provisions of the law and work in your favor.
5. For due diligence
A lawyer will help you verify the buyer’s legitimacy and guide you through the documentation process. During this process, the lawyer will also ensure your sensitive business information is protected and that a non-disclosure agreement (NDA) is duly signed.
When You May Not Need a Lawyer to Sell Your Business
While hiring a lawyer is the gold standard, there are situations where you might not need one:
1. Small-Scale business sales
If you’re selling a small online store or a low-value business (think $10,000 or less), the cost of hiring a lawyer might outweigh the benefits. For these transactions, simple legal templates or guidance from a business broker could suffice.
I’ve assisted entrepreneurs in selling their small e-commerce stores using pre-drafted agreements. They kept things as simple as possible, with no complex intellectual property or licensing involved.
2. If you know the legal ropes
If you have a background in business law, you might feel confident enough to handle the legal side of things. Sellers with a law degree have managed their sales independently.
But for large business deals that may involve complex transactions, an extra pair of eyes may come in handy, even if you’re a legal pro.
What Type of Lawyer Do You Need to Sell Your Business?
Each lawyer has their area of specialty. When selling a business, you’ll need an attorney specialized in business law and has experience with mergers and acquisitions (M&A). These professionals are skilled in handling contracts, paperwork, and compliance requirements specific to business sales.
At Ecomswap, we work closely with M&A attorneys with business sales experience across industries. Such expertise can make a world of difference, especially in niche-based markets.
How to Find the Best Business Lawyer
Once you’ve decided to hire a lawyer, the next challenge is finding the right one. Here are a few tips to simplify your search:
1. Ask your network
Start with your professional network. Do you know someone who recently sold a business? They might recommend a trustworthy attorney. Don’t forget to be specific; ask for a lawyer with experience in business law and acquisitions.
2. Do a personal research
If your network has no recommendations, do some legwork. Look up attorneys online, review their bios, check their experience with business sales, and read client reviews to ensure they’re a good fit.
Prioritize lawyers who’ve worked on deals similar to yours. For instance, if you’re selling an e-commerce store, look for a lawyer with expertise in digital business transactions.
3. Consult your business broker
Finding and vetting a lawyer can be overwhelming and time-consuming.
An easier approach is to rely on Ecomswap. We work closely with a trusted network of lawyers who specialize in various business models, ensuring you get expert guidance tailored to your needs. Whether you’re selling an e-commerce store or a digital business, our team can connect you with reputable attorneys to make the process smoother. Reach out to us for recommendations—you’re in good hands with Ecomswap.
Takeaways
So, do you need a lawyer to sell your business?
It depends on your unique situation.
If your transaction is complex or you lack legal expertise, hiring a lawyer is the best way to protect your interests. On the other hand, small-scale sales or sellers with legal experience might manage just fine without one.
If you choose to hire a lawyer, focus on finding someone with expertise in business law and a proven track record in mergers and acquisitions.
