What Are the Benefits of Using an Attorney to Draft a Business Sales Agreement?

If you’re selling your business, it may be tempting to think that you can increase your returns by saving on the costs of hiring a lawyer to draft or review the business sales agreement.

This is dangerous thinking, as using templated agreements can lay you open to a wide spectrum of problems that can end up costing you far more than lawyer fees.

A qualified lawyer should review any major business contract you enter into so that you are fully protected under Mississippi law—and this includes sales agreements.

Legally binding business agreements can be a “minefield” for any business that fails to review contracts with a legal professional before signing.

As well as sales and purchase agreements, this may include the following types of business contracts.

• Lease agreements, outlining the terms between a renter and landlord.
• Employment contracts, outlining the rights and responsibilities of employees and employers.
• Manufacturing contracts, where a manufacturer makes products for another corporation.
• Partnership contracts, outlining the operational tasks of two or more business owners.
• Dissolution agreements, nullifying or dissolving an already executed contract.
• Franchise agreements, establishing the right to sell, operate, or distribute products associated with a franchise.
• Distributor contracts, allowing a company to distribute products made by another company.
• Buy-sell agreements, determining how to reassign a partner’s business shares.
• Vendor agreements, outlining a relationship between two businesses when one has goods/services that the other wants to acquire.
• Property agreements, detailing a pledge or security in exchange for another party performing an obligation or paying a debt.
• Company operating agreements, outlining a company’s financial and functional regulations, provisions, and rules.
• Service contracts, setting out the terms between a hiring entity and a contractor.
• Shareholder agreements, regulating the relationship between a corporation and its shareholders.
• Releases and waivers, to release a party from legal action by another party.
• Non-compete agreements, to prevent an employee from working for a competitor after employment ends.

There is no legal obligation to hire an attorney to draft business contracts but failing to do so can be a serious and costly mistake. The benefits of having an attorney draft your business contracts are many.

Legal expertise to mitigate risk

When setting up, running or selling a business, many business owners are focused on the “bigger picture” rather than the legal details that can create obstacles or derail plans.

A business contracts lawyer, by contrast, is trained to detect any omissions, loopholes, errors or legal risks associated with an agreement. This professional know-how is irreplaceable when forming agreements in high-stakes situations, such as those that often arise in business deals where the terms and conditions of the agreement are essential to protecting the parties involved.

An experienced attorney will be aware of the common mistakes in business contracts and ensure that all necessary provisions are included to mitigate risk and protect your interests. Even if you hire legal expertise to review an agreement that has already been drafted, this can at least provide additional peace of mind.

Prevention of business disputes

Business disputes can be very costly if they end up in court—both in terms of the legal costs involved and any delays or interruptions to business operations.

By having a seasoned attorney draft concise contracts with clear expectations, deliverables, and timelines, you greatly reduce the chance of costly disagreements and disputes between the parties involved.

Customized agreements to protect your interests

When you attempt to draft a business agreement using templates, the resulting contract may lack the customization you need for your business.

Every business transaction is unique and depends on the circumstances and parties involved. Trying to standardize contracts can leave you open to legal challenges in the future.

An attorney will ensure that each contract is tailored to your specific needs, with the necessary provisions and clauses to protect your interests.

A business sale agreement is usually one of the highest-stakes transactions that a business owner can be involved in. Receiving reliable legal advice to get the agreement right is essential.

Most business owners have invested considerable finances, time, energy, and effort into building and growing their business. Selling it may seem like a good chance to “cash in” but this is no time to cut corners or make rash decisions.

With the help of an attorney experienced in business sales and acquisitions, you will ensure that the business sales agreement protects your interests, mitigates the risk of financial liability, and enables a smooth and stress-free transaction.

Your attorney can assist not only in negotiating terms and drafting or reviewing the documents but also in valuing the business, improving the structure of the transaction itself to optimize the tax impact, and maximizing your total return from the deal.

If the business sale involves third parties, such as landlords, government agencies, banks, franchisors, vendors or licensors, the agreement may require additional legal expertise to shield you from liability and prevent last-minute hiccups with the deal going through.

Some issues from a business sale can arise after closing but retaining the involvement of a business attorney can help you plan for post-closing obligations and prevent any major disputes or liabilities.

There are good reasons why an experienced business attorney should review a sale or purchase agreement in Mississippi. We’ve covered some of these already but this is a good summary…

To determine the true value of the business

If you’re selling a business, understanding its true value is a basic requirement. The business assets may include:

• Physical assets, such as a brick and mortar or inventory.
• Trademarks and/or other intellectual property.
• Trade secrets.
• Brand assets, such as the business name, logo, and website.

These assets should be assessed against the debts, such as loans or payroll, so that you arrive at a fair price for the business. This usually requires the assistance of professionals who understand such valuations.

To protect you from liability

Any debts, fines, lawsuits or legal obligations should be disclosed between the selling and purchasing parties before a sales agreement is formalized and signed.

An experienced lawyer can assist with gathering accurate and complete financial information (such as credit information about the buyer) for the deal to go through without a hitch or risk of hidden liabilities.

To understand exactly what you’re signing

What are the terms of the sale? How will you be paid and when?

These and all other terms and conditions should be laid out clearly and concisely in the business sales agreement so that both parties are aware of their responsibilities. Your attorney will help draft the contract and ensure that it is legally binding.

If you need to draft a business sales agreement in the Biloxi area of Mississippi, contact a lawyer at Rushing & Guice, PLLC for legal advice and assistance.