Are you thinking of buying a small business? If so, it's important to be aware of the potential pitfalls that can derail your deal.
One common issue is dealing with attorneys who can delay, complicate, and even kill your deal. However, there are ways to avoid this problem and keep your deal on track.
Matt from Deal Camp recently shared his experience with this issue.
He had a letter of intent drawn up for a good company at a good price, and both parties were on the same page. But when they sent the draft to the seller's attorney, they got back a long list of questions and low-value pushback points.
On top of that, the attorney wasn't responding to calls or emails, and the deal was dragging on.
This is a common scenario when dealing with attorneys... especially inexperienced deal attorneys like what you might encounter when buying a business in a rural area.
Attorneys are trained to be cautious and skeptical, and they can often find fault with even the smallest detail. While this can be helpful in some cases, it can also lead to delays, frustration, and even the death of a deal.
To avoid this situation, it's important to set clear expectations with the attorneys from the beginning. Here are some tips to help ensure your deal doesn't get derailed:
- Put a cap on attorney fees. Attorneys can be expensive, and their fees can quickly add up if they are allowed to work without limits. To avoid getting hit with an unexpected bill at the end of the deal, it's important to put a cap on the attorney's fees from the beginning. This will help ensure that the attorney doesn't drag out the process or create unnecessary work just to pad their bill.
- Set a timeline for both parties' attorneys to get everything squared away. Attorneys can also be notorious for dragging out the process, asking for extensions, and taking their time to get everything squared away. To avoid this, it's important to set a clear timeline for the attorneys to complete their work. This will help keep them focused and on task, and it will ensure that the deal doesn't get delayed unnecessarily.
- Make sure everyone is on the same page. Communication is key when dealing with attorneys. It's important to make sure that everyone is on the same page and that there are no misunderstandings or miscommunications. This means setting clear expectations, asking questions when necessary, and making sure that everyone understands the goals and objectives of the deal.
In Matt's case, he was able to resolve the situation by getting on a conference call with the other parties, setting a cap on the attorney's fees, and a deadline for them to resolve their questions. This plan worked, and the deal was closed successfully. However, he learned a valuable lesson... he could have saved himself a lot of time and frustration if he had set clear expectations with the attorneys from the beginning.
The Wrap Up
Buying a small business can be a complex process, and it's important to be aware of the potential pitfalls. By setting clear expectations with attorneys from the start, you can help ensure your deal goes smoothly and that you don't get derailed by overzealous attorneys.
If you're looking to buy a small business, it's also important to seek out help and guidance from experienced professionals. Deal Camp is a great resource for anyone looking to buy or sell a business. They offer a range of services and educational resources to help you navigate the process and avoid common pitfalls.