If you’ve been reading along in this 30 Days to ETA series, you know that in the Day #19 post I discussed how as Acquisition Entrepreneurs you can create and justify the price you should pay based off of objective versus subjective criteria — The ETA Business Valuation. Part of the ETA difficulty as an entrepreneur is identifying the value you should be willing to pay for a business as a part of your Entrepreneurship Through Acquisition journey (You can read the previous post by CLICKING HERE). Another ETA difficulty is knowing who you can trust. No matter how many jokes you’ve heard about lawyers, good attorneys can save you hundreds of thousands — or even millions — of dollars when it comes time for you to acquire a business. So, in today’s 30 Days to ETA post, we’re going to explore how you can identify and hire this vital part of your Professional ETA Team — ETA Business Law… Enjoy!
ETA Business Law
As go through the process of Entrepreneurship Through Acquisition, there’s one person on your professional advisory team who will probably make you feel like you’re operating in a safe/confident manner – the lawyer.
I’ve been fortunate to work with both good and bad lawyers in my professional and personal life. I say fortunate for both good and bad not because of the obvious outcomes of why I employed them, but because each provided a different subject matter expertise (SME) that I needed at the time given whatever I was working on. Similarly, as a part of being an Acquisition Entrepreneur you’ll want to make certain that you find just the right lawyer for the Mergers & Acquisitions task at hand. To get us started on finding the best lawyer, here are three overall tips to follow:
- Choose a razor-sharp attorney to be on your Professional ETA Team – Pick a seasoned lawyer who knows the ins and outs of the business acquisitions process.
- Work with the attorney as long as the acquisition is in progress; then stop – You will get tired of the legal jargon and the mountains of legal paperwork involved in the business acquisition process (and don’t get me started on the retainer funding and billing procedure!)
- Be 100% focused on the specific legal tasks at hand – Your attorney is going to ask you questions over and over during the business acquisition. It will take effort to answer questions in answers that are short, concise, and accurate.
I’ve spent more money on attorneys that I’d ever care to admit.
The reason why I spent so much? They were worth it!Sam Palazzolo, Managing Director @ Tip of the Spear
ETA Business Law Contracts
I’m often challenged on this lawyer-thing, typically by an Acquisition Entrepreneur asking, “Why do I even need a lawyer when you acquire a company?” I know that the internet is a plenty with legal forms/templates that you can use. I also know that while you didn’t finish law school, you can get yourself believing that you can skip a few steps and save some money without employing an attorney. I’m going to tell you that’s a huge mistake!
You’ll be dealing with a ton of documents and contracts that require a lawyer’s knowledge and keen eye. Contracts are legally binding documents that detail all agreements between two or more entities. Since you’ll need a strong contract to record every facet of the buyer-seller agreement, term, and condition, you’ll want a lawyer to protect your assets, future business and personal goals.
6 ETA Business Law Contract Elements
I have seen six basic reoccurring elements in the best contracts I’ve seen during my career.
- The offer
- Acceptance of the offer
- Consideration of the details
- Mutuality of obligation
- Competencies and capacities
- Written and recorded specifics
Those are just the basic elements in sound contracts. Obviously, each business will require industry-specific and business-specific provisions to be added to the contract.
6 Additional ETA Business Law Contract Elements
There are many more provisions that could go into your business sales contract, but here are a few additional ETA Business Law Contract Elements:
- Ability to choose a closing venue
- Allowable time extensions and term expansions
- Coverage of attorney fees in closing costs and buyer loans
- Provisions for termination
- Hold-harmless Indemnification Clauses
- Market exclusivity demands
Trusting ETA Business Law
I started out this post by sharing that you’ll want to find/hire a lawyer that you can trust. For me, trust is the foundation that everything is built on. However, trust is not blind. In other words, I am going to recommend that you don’t put 100% of your trust in the ETA Business Law process and never inspect what it is that’s being done. While I want to hire a competent attorney, and you do too, we both need to inspect for what we expect. Here are a few more helpful tips when it comes to trusting the ETA Business Law process:
- Read contracts thoroughly – Ask questions on anything you don’t understand 100%.
- Make sure it contains the terms to which you agreed.
- Take out irrelevant terms and conditions.
- Delete duplicate statements.
- Ensure fairness to both parties.
- Prepare for what-if contingency scenarios.
In this 30 Days to ETA post, we explored how you can identify and hire the vital part of your Professional ETA Team — ETA Business Law. Part of the ETA difficulty is knowing who you can trust. No matter how many jokes you’ve heard about lawyers, good attorneys can save you hundreds of thousands — or even millions — of dollars when it comes time for you to acquire a business. I made several suggestions on how you can find the right lawyer as well as key aspects to a contract that you’ll want to consider.
NOTE – I am not an attorney. This post is purely for educational purposes and should not be taken as legal counsel. Seek an attorney to provide you with ETA Business Law solutions.