Buying or Selling a Business: The Importance of Using a Lawyer and an Accountant

When buying or selling a company, it is important to have experts to back up the owner during these transactions. A lawyer is needed for interactions, contracts, documentation and various transactions, but an accountant is necessary for the financial data, numbers and funds either being obtained or when buying a new business.

Lawyers are needed for multiple reasons, but their greatest use when buying or selling a company is to ensure the entire dealing is valid, legitimate and legal. There are many factors of performing due diligence, and many of these center around researching the business being sold or purchased. The employees, agreements in place, clients, business associations and numerous other processes need to be checked out. A lawyer drafts contracts that the buyer or seller needs to sign with the other owner. These should have certain conditions to ensure the arrangement is beneficial, and when necessary, advantageous for both parties.

When a company is accruing revenue, it is often necessary to have an accountant to keep the book up to date. This means coordinating with payroll for employees, client payments and interactions and other financial matters. Without an accountant, it is more frequent that tax violations and other complications may arise. This means keeping accounts and books maintained is essential for the company. In this way, it is possible to provide the information to the new seller or buyer. This assists in due diligence and increases the perceived value of the company, or it could increase the knowledge with accounts, clients and the financial data.

The Need for an Accountant

While there are several types of accounting software available for someone to use, it is best to have the actual professional help with the daily operations. It does not matter if the business is well established or a startup. An accountant may assist in analyzing reports, statements and issues that may be complicated. This could all be negative or positive, and they may require the attention of the owner. The accountant has knowledge if equipment has been purchased or leased and other assets are on hand. This is essential when selling the company so the new owner is aware of what items exist in the inventory. The professional may compare debt to income, future and past data and explain these matters.

When buying a new company, the accountant may have detailed documents about the company structure so that tax situations may be understood, how much in liabilities are accrued and what assets exist to assist with the purchase. He or she could help with business plans and help in determining the actual and perceived value of the company so that an asking price may be determined more easily. With the assistance of a lawyer, an accountant may even ensure that all due diligence has been performed so that no additional issues arise when buying or selling the company.

The Need for a Lawyer

When selling a business, a lawyer often works with other professionals to ascertain the value of the company, what assets and liabilities exist and how best to ensure this information appears in a positive manner to the potential buyer. This means explaining the structure, the layout, the files and figures and how employees and clients work to better the business overall. The profits obtained through relationships and consumer sales may be less important than the business to business associations that are the primary source of income. The lawyer ensures these transactions are legal and valid, and then he or she details how best to present the information to the buyer.

When buying a business, the lawyer may have more work than when selling. This is to ensure that due diligence is performed and all factors are considered when purchasing the new company. This means understanding assets, liabilities and equity in the business and knowing what conditions may be applied to the contractual sale. Drafting contracts and editing the terms is necessary when sealing a deal with the seller. This may even mean negotiating with the seller or his or her lawyer to ensure the best terms are attached to the arrangement. The lawyer may need to contact state officials, file documents with certain agencies and obtain licenses when buying a new company. It is his or her job to protect the owner from litigation, liability and legal injury when buying or selling a company. With a business lawyer, it is possible to achieve success.

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Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws they may affect a case.

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