Richard Burt Professional Law Corporation
Mon - Fri: 9 AM - 6 PM
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Sending an email to Richard Burt or leaving a voice mail for him or his assistant (and a reply from either) does not create an attorney-client relationship.
No attorney-client relationship will be formed until you and Mr. Burt have agreed that he should represent you, he has determined that there is no conflict with an existing client, you have signed an engagement letter that sets forth the terms of the representation, and, when requested, you have made a fee deposit.
Please note that the initial consultation is solely to determine the nature of your legal matter and to discuss fees. Mr. Burt does not offer free legal advice.
After an attorney-client relationship has been formed, email (and voice mail) may of course be freely used for confidential attorney-client communications.
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NOTE: Mr. Burt does not handle litigation of any kind. If you wish to sue someone, are being sued, or need to make a court filing of any kind, Mr. Burt cannot help you. You should not contact him for those services.
The Buyer’s Lawyer in Purchasing a Business
If the purchase of a business represents a major financial commitment by the buyer (and typically it does), the buyer should have the assistance of a lawyer (and an accountant). The role of the lawyer can vary with how large the transaction is and how sophisticated the client is.
When should the buyer hire a lawyer? Certainly, before the buyer signs any legally binding document. Typically, I am hired once the buyer has found a business he or she wants to pursue buying and has gotten some basic information from the seller or the broker that shows that the purchase could be worthwhile.
When my client is the buyer:
• I help structure the purchase arrangement, which can be an asset sale, stock purchase, or merger. While the asset sale is the most common arrangement, sometimes a transaction has some legal or commercial obstacle that a different arrangement will eliminate. Each arrangement has its advantages and disadvantages, which I can explain to the client.
• Typically, when I am hired, there is no purchase and sale agreement in place. Rather than automatically preparing a contract for the buyer to propose to the seller, I discuss with the client preparing a letter of intent as the first step. It usually saves on legal fees to negotiate a contract by hammering out the key terms in a letter of intent than by lawyers trading drafts. If the parties can’t agree on the basic business terms, why bother with the legal terms?
• In addition to drafting the purchase and sale agreement, stock purchase agreement or merger agreement (“acquisition agreement”), which will contain the price, manner of payment, representations and warranties by the seller to the buyer, and a covenant not to compete, among other things, I can draft ancillary agreements such as employment agreements, consents to lease assignments, and other agreements.
• To the extent requested, I can help with the investigation of the business (commonly referred to as “due diligence”) so the buyer has greater assurance that the business is as the buyer thinks it is. For example, I have developed questionnaire for sellers to complete that contains over 170 questions, which is designed to smoke out problems. This questionnaire can save a tremendous amount of time and effort in the due diligence process. In addition, having this extensive questionnaire completed by the seller allows a shorter (but more thorough) acquisition agreement to be used.
• Typically lawyers don’t act as escrow holders, but I would help with an escrow held by a bank or escrow company if an escrow were required, including negotiating changes to the escrow agreement if appropriate.
Lawyers don’t provide valuation services. The decision to purchase or sell a business, what it is worth, and the price to pay for it or to sell it for are not legal decisions.
Because prospective clients are often uncertain whether they should hire me, I offer a fixed-fee consultation to discuss the prospective purchase and for the prospective client to ask questions and get answers. That way they can get a feel for whether I would be the right lawyer for them without an open-ended commitment, and I can freely give advice without being taken advantage of. The fee for the conference is $500. If a client wants me to review and comment on a letter of intent or other document as part of the consultation, I do that as well. For the fixed-fee initial consultation, the time for the consultation and any pre-consultation review of a document is typically limited to one hour in total.
Of course, clients often want to know how much the acquisition will cost in terms of legal fees. The correct answer is that it’s unpredictable. I have seen too many twists and turns in these kinds of deals to think that any estimate would be reliable. So take any estimate of legal fees with a grain of salt.
The best bet is to hire a lawyer with experience in the purchase and sale of businesses who has a good reputation and to work with that lawyer to agree on the scope of services to be provided.