...as an Acquisitions Advisor, I am often asked this question (and others) about attorneys for the transaction.
So today I'm sharing the following FAQ's and a “pro tip” for anyone involved in buying or selling a business...
Question: Do I need an attorney to buy or sell a business?
Answer: YES! Buying or selling a business is a high-dollar, potentially high risk transaction. You need expert legal advice from the RIGHT attorney.
Question: What kind of attorney should I use?
Answer: PLEASE only use an attorney with extensive experience in Mergers and Acquisitions contract law. Don't use your cousin the divorce attorney. Don't use a friend you know who specializes in sports management. And don't use the attorney who comes with your monthly membership package through your automobile club.
* PRO TIP: Before engaging an attorney, ask them the following question “Do you focus on getting the deal done, or only on finding all the ways the deal can go wrong?” (Maybe ask some of their references this question as well) You want an M&A attorney who has an end goal of helping you accomplish your acquisition safely. Their job is to help you explain, mitigate and navigate risk, but ultimately, you want them to be part of your team to make the deal happen, not kill the deal. I've seen far too many attorneys who have literally killed the deal by “over-lawyering”, instilling fear and worry into their clients that ultimately leads to an outcome far worse than the risks they were trying to prevent.
Question: How much should I expect to pay for an attorney in my acquisition transaction?
Answer: Most of our clients pay between $3,000 to $7,000 for their legal services to close their acquisition transaction. At Westbound Road, we have some strategies and services which normally save our clients about $3,000 to $5,000 in legal fees. One recent client was quoted $50,000 for his legal fees on his transaction, and we found ways to cut that down to just $5,000!
I'm buying or selling a business...do I really need a lawyer?
by an intermediary
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I get the scar tissue here for searchers around cost, and my firm is set up for this type of M&A specifically to fill the quality gap between the international firms (where I was trained) and your "cousin's divorce lawyer." But if a potential client comes to me on a $2M deal that involves real estate and an SBA loan and is deeply offended when I quote $25K, that's a red flag. People forget lawyers can choose who they work with, too.
If the plan here is to grind lawyers into dust and somehow get $25K worth of legal fees for $3K, I'm not really aligned if I'm honest. I'm always happy to discuss what value I bring to the table, and if it's not value you're willing to pay for, then best of luck. If things go sideways and you realize there are gaping holes in your document, at least you'll have $22K to put towards litigation, I guess.