Role of the legal adviser
All answers are for general guidance only. Each case must be handled on individual facts.
Q: What is the role of a solicitor in selling your business and what skills should a company look for when choosing a solicitor?
A good lawyer will help you to:
• Prepare the deal
• Get the deal done
• Keep the money!
Prepare the deal. Your lawyer can review legal and commercial areas that a buyer will want to investigate. A well-groomed business gives a good impression and will speed up the buyer’s enquiries and encourage a quicker transaction.
They can help you decide whether to sell the shares in your company or its assets, and whether you should consider matters such as a pre-sale dividend or a restructure.
Heads of Terms prepared by your lawyer will normally describe the basics of the deal you have agreed. They can undertake due diligence on the status of the buyer – are they good for the money? The buyer may want a period of exclusivity and you would be wise to insist they agree confidentiality undertakings. You may also be able to negotiate a non-refundable deposit or a contribution towards your costs in the event of the buyer pulling out.
Get the deal done. Your lawyer will negotiate the contractual documentation. Valuable ground can be won or lost at this stage and you will need an advisor who is both experienced and commercial in their approach; focusing the greatest attention on the most important points. With dozens of documents the success of a transaction is greatly affected by the organisational ability and experience of the lawyers involved.
Keep the money. The buyer will want many warranties and indemnities. If these are not negotiated properly, including the preparation of an effective disclosure letter and obtaining limitations on your liability then there is the real risk that the purchase price may be reclaimed, possibly several years later.
Transacting a business sale is a highly specialist task, do not assume that your existing lawyers are right for the job. Recommendations can be invaluable, but you should certainly meet with and feel a good rapport with your lawyer.
Are they experienced, organised and enthusiastic? Do they ask what is important to you, and do you feel reassured that they can deliver what you want on time and to an agreed budget?
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