I have handled numerous transactions involving the buying and selling of businesses. Like buying and selling a house, these transactions can be straightforward, or often run into snags along the way. The biggest problems I’ve seen involved parties who had decided on a handshake deal. And you may be asking, as an attorney, are you just writing this to scare us and as a form of job security? That may be one of the purposes, but it’s also one of common sense. Why? Because at some point, each of these deals goes pear-shaped. Misunderstandings, complications in financing, bad due diligence, and one or both parties decides that they need to “lawyer up”. And you say, well isn’t that what you wanted lawyer lady? Yes, but here’s why it’s a problem. Early on we could have streamlined the process, asked the right questions, put it down on paper. Time and money would have been saved. But now, people are distrusting each other. Lawyers are stepping onto possible landmines because we are only now learning what may or may not have occurred. There are accusations. The goodwill that may have been there at the beginning has evaporated and it’s all being blamed on the lawyers. Sounds fun right? And with every passing phone call, every accusatory email, the bill just keeps going up. What would have been easy before is now difficult and fraught with enmity and blame. The lawyers are trying to protect their clients’ best interests, but you’re also playing cleanup. What didn’t happen? What question hasn’t been answered? Who is hiding what? It’s in our nature as attorneys to do this. I write this as a warning but also in the hopes that people understand what you’re dealing with here. Get the attorney involved early. We can be as hands off as you’d like in the negotiation process, but we can help along the way so those snags are minimized, that the questions are asked and answered, and that the items get put down on paper so that everyone doesn’t second guess things later. Transactional lawyers are not looking to go to court, in fact, we are trying to prevent that from happening in the future. Handshakes may be friendly, but they are not a signature on a contract.
Business Law For Everyone