Business Law

Buying & Selling a Business: Preparing . . .

It can be a big waste of time for both you and the lawyer if you're not prepared for your first meeting. Business lawyers usually charge by the hour, so being unprepared will also end up costing you money, because it will take longer for the lawyer you hire to get up to speed on your legal matter.

The lawyer will want to know who you are and how you can be contacted, and a little about your personal and business background. A lawyer will clearly want to understand your relationship to your business and be comfortable that you have the authority to speak on behalf of the organization. Therefore, you need to write down all this information in a logical manner and have it available for the lawyer.

Sometimes a lawyer may send you a questionnaire to fill out before your first meeting. If this happens, be sure to fill it out and send it in to the lawyer's office before the meeting. Also send along copies of any available documents that may be requested in the questionnaire.

Before you get too far into a meeting or conversation, the lawyer is going to want to know about possible conflicts of interest. He or she will want to know the names of the business you may be thinking of buying, or the names of the people considering purchasing your business. If the lawyer or the lawyer's firm represents anyone on "the other side of the fence," he or she will have a conflict and will usually not be able to represent you.

Written documentation is especially important in a business setting. Even if a lawyer doesn't ask for documentation beforehand, it's still a good idea to bring a copy of all documents relevant to your situation to the meeting:

  • Your business plan
  • A "pro forma" balance sheet, including assets and liabilities that are going to be contributed to or assumed by a new business
  • A proposed list of investors, directors and officers, including their addresses, telephone numbers, email addresses and other contact information
  • A list of vendors, contractors or other parties with whom you're doing or expect to be doing business
  • Tax returns, financial statements or corporate records for existing businesses or business entities
  • A copy of any documentation that has already been prepared or entered into in connection with the business, such as agreements, minutes of meetings and notes outlining how the business is to be organized
  • Letters, memos and other correspondence relating to the business organization

Questions To Ask Your Potential Lawyer

Prepare a list of questions to take with you to your first meeting. In theory, no question is too silly to ask. Keep in mind, though, that you don't want to scare a lawyer out of representing you.

In hiring a lawyer to help you buy or sell a business, you would want to ask questions about the lawyer's background:

  • How many transactions of a similar nature has the lawyer handled?
  • How much of his or her work is done in this area?
  • What paperwork is involved and how long will it take to finalize?
  • How would the lawyer go about handling your situation? What is the process?
  • How long will it take to bring the matter to a conclusion?
  • Will the lawyer contact you regularly?
  • Will the lawyer provide you with copies of all important documents?
  • Would the lawyer handle the case personally or would it be passed on to some other lawyer in the firm? If other lawyers may do some of the work, can you meet them?

Don't be afraid to subtly quiz prospective lawyers to see if they really know what they're talking about. If they're holding themselves out as having expertise on your industry, ask them to explain certain aspects of the industry to see how deep their understanding is.

Money Matters

You'll want to ask how the lawyer would charge for his or her services:

  • What is the lawyer's hourly rate?
  • What would the estimated fees be for your matter?
  • Would the lawyer consider doing the work for a flat fee?
  • Would a contingency fee arrangement be possible?
  • Does the lawyer advance out of pocket costs?
  • Would there be a retainer payable up front?
  • Would any unused portion be refundable?
  • How will the lawyer charge you for copies of documents, faxes and so forth?

Ask to be provided with a copy of the lawyer's retainer agreement and have it explained to you before you decide on retaining the lawyer or the lawyer's law firm. You may end up paying a lot of money to the lawyer you hire, so make sure you understand what you're signing up for.

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