Many buyers do not know if or when an attorney may be needed in the process of buying a business. That question always comes up when chatting with people beginning the process of searching for a business to buy.

As a rule, it is recommended that buyers should consult their attorney for the review of any legal documents. Some of the types of documents involved in closing a business purchase that may be candidates for attorney review are:
  • Covenant not to compete
  • Employment contract(s) (for existing employees or the current owner)
  • Review of the escrow instruction
  • Review of promissory note
  • Review of new or assumed lease
  • Review of any agreement produced by the other party
  • Checking for any pending lawsuits against the business, or any other liability problems
Attorney's can draw up non-compete agreement for the seller to sign, as well as employment contracts for key employees who are critical to the operation of the business. You don’t want the seller or manager setting up shop down the street while you are getting your new business up to speed. It is wise to interview key employees to make sure there is a good fit.

Your legal counsel can make or break the deal. Therefore, if you choose to engage an attorney to assist you in the purchase process, it is important that they be deal friendly and transaction experienced. You must articulate your objectives and seriousness in getting the transaction completed. And that, unless something completely unanticipated is discovered, the attorney's job is to pull the documents together to get the deal done.

In many instances, the sale of a business fails to close because the attorney for one side makes too many demands of the other side. Certainly, you want your attorney to protect your interests, but not to the point where the demands are so onerous that the other party walks away from the deal.

Business brokers can refer you to legal professionals if you don't already have one that is experienced in legal issues related to business transfer transactions.

If there is no one monitoring the details and leading the progress of the transaction, the ball can be dropped somewhere along the way. The broker's role at this point in a business transfer transaction is to act as the intermediary. The business broker--having been through the process many times, much more often than any of the attorneys or other advisors involved--knows the pitfalls. They keep the deal on track and act as the captain that keeps the team working together towards the common goal.......the successful consummation of the sale. As long as all advisors involved are operating on the same wave length as their respective clients -- the buyer and the seller -- the odds are good that the process will be timely and smooth.