Many people start their company with the help of an attorney—doing things like drafting the articles of organization, member or partner agreements, and various transactional documents. Unfortunately, a number of people don’t continue this relationship after the initial documents have been created because their focus becomes on sustaining the business, and dealing with day to day issues. After a while of steady progression, business owners do eventually begin planning on the future sale or change in their business and again re-connect with their attorney to strengthen their business planning to help ensure a path to success. A few of the key services attorneys can provide to make your business more appealing for an acquisition down the road are discussed below.
Key Issues to Consider
The sale of a business, or business acquisitions are inherently complex regardless of the parties involved. As a small business owner, you can take concrete steps to simplify this process on the front-end when you are planning and growing your business. When either another person or a different company is looking at purchasing a company, they will want to see stability within the organization in the form of standing contracts with large vendors and clients. They will also be checking for specific clauses within various business contracts, such as indemnification—making sure they are not held liable for problems outside of their control, assignment rights—allowing you to transfer the rights under various contracts to the new owners, and termination rights within real estate contracts—providing a mechanism for terminating lease agreements if the new owners want to relocate the business. Working with an attorney during the business planning phase of your company will help to make sure these items are consistently considered and included in the various agreements your business will enter into. Attorneys also bring a wide variety of experience to business planning for their experience on both sides of the negotiating table during acquisitions. If business owners fail to involve counsel in their business planning, it can lead to significant setbacks in future negotiations. For example, even if someone is very interested in purchasing your business, if they are unable to take over the rights under a major supplier agreement, they may either significantly reduce the price they are willing to pay, or even worse, back out of the deal entirely.
Moving Forward with Your Business
Starting a business is no small undertaking. You should work with an attorney to structure your business and take care of the initial agreements, but don’t let the relationship stop there. You should continue to work with an attorney to plan the future of your business. Not only will an attorney be able to help you articulate a plan, they will also be able to assist in creating relationships that will lead to the successful execution of that plan in the long run. If you are looking at starting a new business or are interested in learning more about how an attorney can help with business planning, please reach out to the sponsor of this article, Vlodaver Law Offices, LLC, an experienced business solutions and transactions law firm in the Twin Cities. If you would like a free legal consultation, contact us.