Selling a business | 3 min read

Why you need a lawyer when selling a business

Last updated: August 18, 2020

It’s essential to have an experienced legal professional on your side when selling a business. They’ll work with you through each step of the process and set you up for the best chance of success.

Nick Rimington, Senior Associate at Norton Rose Fullbright Australia (NRFA) says a commercial lawyer “can draw on experience from previous transactions to ensure that you have turned your mind to every aspect of selling your business”.

Put simply, they’ll take the time to understand what you want out of the sale and then work to help you get it.

 

Where to start?

Nick recommends his clients write a wish-list of what they want from their business sale. This helps give them a clear understanding of what they want from the very beginning of the process.

A good lawyer will help you realise these goals and can also help moderate your initial expectations to avoid disappointment later on.

Once they understand your goals, your lawyer should outline the process moving forward, explain what documents you need and suggest any other ‘must-haves’ that you should be working towards.

 

What specific things will a lawyer do?

Throughout the sales process, a lawyer will make sure your interests are protected and work to help you achieve your goals. They’ll also work to ensure the reputation and legacy of the business you have established endures.

Specifically, Nick says a lawyer will help you:

  • Conduct due diligence on the buyer
  • Set a timeline for tasks like stocktake, inspections and settlement
  • Draft documentation to facilitate each aspect of the sale, including term sheets and a sale of business contract.
  • Transfer the lease of the premises, along with any plant and equipment to the buyer
  • Ensure all intellectual property is properly licensed
  • Look after your employees

 

When it comes to documentation, your lawyer will be able address each detail and double-check you understand what’s included.

Their expertise here will help ensure there are minimal liabilities and obligations on your part following the settlement, and make the process as smooth as possible. They’ll be able to settle any disputes and ensure outstanding debts or liabilities are finalised.

 

What are the risks if you don’t use a lawyer when selling your business?

Not using a lawyer could cost you significant amounts of time, energy and money. Crucially, Nick says that if you don’t use a business lawyer, “you’re unlikely to get the best deal”.

You can also leave yourself open to unexpected issues after the sale. If your interests aren’t clearly laid out in writing, there could be room for disputes later on with the new owners, former suppliers or former employees. “You may be exposed to liabilities and obligations even after settlement”, says Nick.

 

When in the process of selling a business should you get a lawyer?

Nick recommends getting a lawyer as soon as you’re ready to sell. Having a professional with legal knowledge on your side will ensure all your interests are protected from day one.

The sooner you get a lawyer involved, the sooner you can start working towards getting the best price for your business, and achieving the goals you’ve set.

 

Remember…

An experienced lawyer will take the time to understand your goals, then work with you to get the best price for your business. They’ll manage the fine print, help you understand any confusing jargon, offer professional guidance and ensure you’re protected in the long run.

Sound legal advice really is an investment in your future, so take the time to get solid legal and financial support from the very start of the sales process.

Wondering what else you should consider when selling a business? Check out our ultimate guide on how to sell a business.