Don't just sign it. Understand it.™

Every client wants fast, simple, and easy.

I have had more than one client initially tell me that if their contract is more than 1 page long, they won’t sign it!

I understand. I consider this request reflective of the client’s desire to maintain focus and control and get this deal closed. I agree. Keeping things simple, cost-efficient, and on track is my goal, too.

However, your agreement is evidence which should reflect the parties’ “meeting of the minds”. Limiting the number of pages likely will not accomplish that goal. We will keep things as simple as we can, while also thinking through and clarifying scenarios such as: Are the purchase price payment terms clearly defined? What if a key employee quits a month after closing? What if the business’ rent goes up in the year after closing?

We will protect your interests in a legally binding document within your budget and timeline for closing. Your goals will be driving our game plan.

Once a buyer and seller have agreed on the ever-important purchase price, one major step is done.

Yet even in a relatively simple business sale, there are other important issues to consider and terms to review before closing. You will want to confirm: the nature of the sale, identification of the stock/membership units or assets being sold, review of third party contracts connected to the business, assignment of any real or intellectual property, payroll, contact lists, social media accounts, and so on.

Most likely, you will want to include those terms in a legally binding contract or “purchase agreement”.

Sometimes clients arrive with all of these issues already resolved.  Sometimes there is further work to be done before closing.

The goal is always to keep things moving to closing.

If you share with me what you all have agreed on to date, I can work with you to create a timeline and cost-efficient plan to take your deal over the finish line.

This is a common concern since small business owners often sell their businesses to partners, employees, family members, or friends whom they already know and trust.

Being in good faith, trusting each other, and wishing the best for each other is not inconstant with transforming your hand-shake deal into a written agreement.

Putting the terms of a hand-shake deal into a written purchase agreement is an act of creating a better form of evidence, not a sign of distrust.

A written agreement eliminates assumptions and mis-matched memories, fleshes out terms, and assures that the parties have a “meeting of the minds” on all material terms. It therefore offers stronger protection for both parties. Seeing the terms in writing often prompts both parties to think of terms they had simply not thought of when the terms were strictly in their minds.

A written contract will not be effective until both parties sign, so each party still maintains control until the terms are acceptable.

Taking this step should strengthen your original deal and help to preserve your friendship during and after closing.

If you cannot agree on the terms in written form, then perhaps the deal had material flaws to begin with.

This is a common fear of many clients and I understand why.  Yes, we lawyers are often busy people with heavy case loads who are also thorough and detail-oriented. The combination can mean that our involvement in a case can sometimes slow things down.

In my case, I do pride myself on keeping my cases on track and driving things forward to meet deadlines and closing dates as much as possible. I view my role as to be on your timeline, not you on mine.

I will say that the better organized the client is and the more their case is a priority for them (including timely responding to my requests), the faster I can get things pushed ahead. I also hope to prove to you that any time we do spend (which might seem to slow things down) is well worth it as a slight detour for the long-term benefit of protecting your interests.

I can only hope you see a trail of rainbow sparkles in the ink after you sign your deal (on time) under my watch.

Understood.

First, my role is to help you close the deal, not stop you from doing so! This includes meeting deadlines. I have literally closed a deal in 24 hours at the client’s direction, and also advised clients that it is in their best interests to post-pone a closing date (sometimes more than once). In each case, the client remains the decision-maker.

At whatever stage in the process you are in when I get involved, yes, I will assess the deal, inform you of any issues, and support you in determining if it is sufficiently ready before you sign.

My role is to educate you on protecting your interests. If I see a way your deal could be improved to your advantage, I will always inform you, while avoiding getting off into the weeds on issues that you’ve confirmed are not priorities. (Think of it like informed consent before surgery: You do need to understand the doctor’s explanation of the procedure and the risks, but assuming you do, the goal is to enter the ER.)

We will work together to get you to closing on a timeline you define.

I love your napkin – as a concept!

But I must say that dropping those terms into a more formal document will provide better protection for both of you.  A napkin (or any short list of terms) is a good place to start, but likely will not address other important terms which a contract for the sale of any business should address.

Like it or not, buying even a “small” business is a big deal. There are many potential risks. Much like buying a house or a car, there is good reason to have substantive (though not unnecessarily long) documentation to protect seller and buyer.

Some of the most expensive lawsuits I’ve seen have arisen from parties who did not put their original terms in a formal agreement and then had a major dispute later. The document we create does not have to slow you down.

P.S. And you can still frame the napkin! And my goal would be that your contract is so beautiful, that you’ll want to frame it, too.

Disclosing and reviewing a business’ past documents, records, financials, and taxes (known as “due diligence”) can seem like an unnecessary delay before closing a sale, especially if you as the seller know that your business has always been run on the up-and-up.

However, within reason, due diligence is actually a good thing for both parties. If you’re the buyer, you want to walk away knowing exactly what you just bought. If you’re the seller, you also want to walk away knowing exactly what you just did – or did not – sell and represent to the buyer.

Therefore, compiling accurate and thorough due diligence materials is a good thing. That said, sometimes we may need to push back if voluminous, minor, irrelevant, or non-existent documents are requested.

You and I will work together to create a practical and fair way to provide both sides with the paperwork and peace of mind required.

“Due diligence” refers to a thorough investigation by a prospective buyer of a business’ past documents, records, financials, and taxes before completing the purchase of that business.

Typically the buyer will provide the seller with a list of materials it requires. The list will vary depending on whether the buyer is already an owner or employee who knows first-hand about the business, or an outside third party who needs proof of what is being represented within the sale.

The goal is to verify what exactly is and is not being sold and identify any hidden risks. For example, if the business is a restaurant, that list might include a list of all assets, furniture, equipment, and inventory; a copy of the business’ lease; the status of key employees; supplier and vendor contracts; service history for equipment; and social media lists and analytics.

The process might also prompt the seller to expressly exclude certain items not being sold such as furniture or equipment brought to the premises from home which are their personal property.

If conducted fairly, due diligence should ensure a detailed understanding between the parties, a smoother closing, and fewer issues post-closing.

From the moment a buyer and seller strike a deal to buy or sell a business, they are ready to close.

This does not mean avoiding the necessary steps of due diligence or contract preparation and execution, but it does mean maintaining the momentum of the deal without unnecessary paperwork or delays.

I have closed deals in 24 hours and over several months’ time. It depends on how complete the deal is when I get involved, how complex the terms are, how many attorneys are involved, and other factors.

If the buyer is a current owner of the business, most issues about the business’ recent past will be known, requiring less due diligence. If the buyer is an outsider, they will rightfully need more documentation about the value, profitability, and risks they are purchasing.

No matter the scenario in your case, you and I will be coordinated as to our closing timeline. It will be getting everyone else there with us that may be our challenge!

A Letter of Intent (LOI) or Memorandum of Understanding (MOU) are each short, preliminary documents signed by the parties that outline the material terms of a proposed transaction.

Such documents are generally considered non-binding “gentlemen’s agreements” that confirm the parties’ general agreement on the terms of a proposed transaction before in-depth due diligence or long-form purchase agreements are prepared or substantial legal or accounting fees are incurred in closing the deal. They may include non-disclosure provisions and a period of time for finalizing the deal.

A buyer considering this question should evaluate whether they are already an owner of the business (such as buying out your existing partner) versus a brand new owner of the business, and whether this will be a stock or asset purchase.  In many cases, forming a new LLC or corporation provides a fresh start, liability protection, and tax advantages. We will assess this question during the purchase process, taking into account the nature of the business, stock or assets being acquired, and tax considerations.

By the time a client and I get to the closing date, due diligence has been completed, all terms have been agreed to by the parties, and all documents have been fully negotiated. At closing, generally the parties execute the purchase agreement, transfer assets or ownership interests, pay the purchase price, and deliver all required closing documents. Historically, closings occurred at an in-person meeting of all parties and attorneys (and some still do), but they are now often conducted virtually and digitally by e-signature.

Please contact us for a complimentary review of your specific facts as fees are customized to each client’s case.

In general, we try to bill on a Flat Fee basis for every legal matter. A Flat Fee is a one-time total fee for all actions required for that legal matter. This provides the client with predictability and control. The Flat Fee includes our popular “Unlimited Pass™” of communication between attorney and client in all mediums to be sure the client understands the legal process and can ask questions, and take as much time as is needed to understand and be educated on their matter.

Whether we can bill on a Flat Fee will depend on how complex the transaction is, how many lawyers are involved, how complete the due diligence is, and to what extent the parties have agreed on the material terms.  A Flat Fee works if the project does not have too many variables or unpredictable factors.

For example, most business sale transactions (large or small) will include evaluating the terms of the transaction, the drafting of a Purchase Agreement and the review of Schedules and Exhibits, assets, and contracts. The sale of a small business with one location to an existing employee who is already familiar with the assets will require less time than the sale of a parent company with multiple subsidiaries to an outside third party unfamiliar with the business’ assets and financial history.

If a Flat Fee is not possible, then an hourly rate will be applied, and we will discuss a projected budget.

Either way, we encourage clients to apply the “2.5% rule” and allow 2.5% of the value of the transaction for legal fees.

We will work to ensure that your legal budget adds value to your transaction and peace of mind.

We would love to chat with you about how we might work together to accomplish your goals within your budget.