The answer? Right away. Whether you’re starting a business or taking your business to the next level, it is imperative to hire qualified counsel who will be a partner in growth with you. Not only to help you think through and understand the issues, but even more importantly, to execute on the important matters for you. In most cases, there are too many variables for a non-lawyer to be aware of.
Not only can hiring an attorney from the get-go save money in the long run, but we can spot the issues and red flags that even the most seasoned entrepreneurs miss at times. Whether you’re at the beginning of your entrepreneurial journey or looking to exit or sell your company, make sure you have someone on your team that can navigate the risks and leave you free to plan for future success.
This article isn’t meant to scare anyone into hiring an attorney. Instead, we want to highlight the benefits of hiring an attorney, which can include, more time, preventing costly mistakes and problems, better execution and results on your plan, and perhaps more money at the closing table. Let’s take a look at a few services we offer and why it’s important to have an attorney available to help.
Starting a Business & Structure
Whether you’re an LLC, Corporation, or Limited Partnership, you have requirements you must fulfill to operate your business legally. For example, an LLC requires Articles of Organization, which serve to establish your business with the state. This document lays out the basic information of your business, and while you may be comfortable doing this yourself, an attorney can assist you in deciding what type of business entity you should be based on tax ramifications, ownership structures, and other issues to consider.
There are a number of important documents that you’ll want legal assistance with. Some business owners assume that ‘off-the-shelf’ or ‘boilerplate’ agreements will suffice, regardless of circumstances. But, we’ve seen our share of DIY legal situations that could have benefited from having an attorney draft it for them.
One horror story that comes to mind was an entrepreneur who owned 95% of the LLC and gave a key employee a meager 5% for his “sweat.” The pair decided to “save” money and get an operating agreement from an online resource for a couple of hundred dollars. The default provision in the agreement stated that a sale of the company required unanimous consent of the members. Lo and behold, the key employee and the owner had a falling out, the key employee left, and the owner kept building the company. One day, the owner got a multi-million dollar offer to sell the company that he wanted to accept. But, the key employee, who was still filled with resentment, dragged his feet and slowed the deal to a grinding halt. The key employee then used his leverage to negotiate a better deal for himself.
This should have never been an option for the key employee. A well drafted operating agreement would have prevented this sort of scenario from ever playing out. How much do you think the business owner would have paid to go back in time and do the operating agreement the right way? Don’t be penny wise and pound foolish when it comes to setting up your partnership for success.
Buying a Business
It can be tempting to buy an established business – after all, they’ve done the heavy lifting of getting the business started for you, right? Or perhaps you want to buy into a partnership – thus allowing you to share the profits as well as mitigate the losses. You might even wish to purchase a franchise, and experience the benefits of national or regional exposure. And while these may seem like cut-and-dried transactions, the truth is you need an experienced attorney on your side to protect your interests, help you understand the nuances of the deal, and help drive and the process from start to close.
Buying a business can be the best decision you ever make as an entrepreneur. Certain missteps, however, can turn a dream venture into a nightmare investment. Here are 5 common mistakes people make when purchasing a business, many of which can be avoided by doing your homework beforehand.
Selling Your Business & Exit Planning
Selling a business is an intricate and time-consuming process that can monopolize your time, leaving you unavailable to keep leading your company the way you always have. Hiring an attorney at the start allows us to handle such matters as whether or not to engage an investment banker or broker, compiling all necessary books, records, and documentation related to taxes and employees, due diligence, non-disclosure agreements, earnout considerations, and many other agreements. With so much riding on your decision, you simply can’t afford to be without informed legal representation.
Once you have decided that it is time to sell, there are some important steps to take to help make the process as easy as possible and maximize the amount you can get paid. Click here for 3 additional tips to prepare your company for sale.
The beginnings of your business lay out the foundation for what it will become. Business necessitates contracts, and starting a business necessitates plenty of them. These contracts could be used for years, or their effects could control parts of your business for even longer. An experienced attorney makes a world of difference in creating contracts. While your business may be able to get by for a little while using whatever contracts you can make yourself, this is not an area where just getting by is good enough. An attorney is highly recommended for drafting contracts and can save you a lot of pain (and money) down the line.
Let Us Help
With so much riding on your decisions, you simply can’t afford to be without informed legal representation. Contact us today to discuss your company’s legal needs, and let us take the stress off of you and your business. We even offer a range of flat-fee legal packages that can help your small business without breaking the bank.
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- Retaining Key Employees After A Merger Or Acquisition
- Lessons Learned From A Business Divorce