One of my clients was considering buying a business. He was a wealthy man, but he chose a small business for himself.

When it came time to negotiate, he demanded a full audit of the facility first before making an offer. In response to my comment that doing this violates the generally accepted sequence of agreeing on the price and only then conducting the due diligence, he said: “I know better. I have been involved in tens of millions of dollars in deals. It will be as I said or not at all. "

As a result, no one, of course, allowed him to delve into the company's documents before the price negotiations were held, and the business was sold to another buyer.

Read our article about the sequence of actions when drawing up an offer.

Swan, cancer, and pike.

Three principles are fighting in us - a know-it-all, a perfectionist, and a lazy person.

The know-it-all (overly self-confident person) sincerely believes that he understands the situation. “I don’t need to listen to the opinion of any goonies. I know everything better than them. "

“I know better. I have been involved in tens of millions of dollars in deals. It will be as I said or not at all. "

The perfectionist (the person who constantly doubts) says: “Avoid mistakes at all costs. Everything must be checked and rechecked to avoid even the slightest risk of missing out.”

The bummer whispers: “Come on already, stop straining. This will do. I don't want to experience this stress anymore. "

As a result, many buyers make rash offers, over-delay and are late with an offer, or even don`t make an offer at all.

That's not all

More or less practical people understand that in such a situation it is better to enlist professional help. In this case, the help of a lawyer.

But here a whole series of questions arise:

If you call someone for help, it is not clear what to entrust them with and how to control the work. Can you completely rely on them or do you need to control every step?

Typical mistakes that we observe when engaging a lawyer in the preparation of a proposal:

  1. Drafting an offer (writing a contract) takes too long and the business goes to someone else. If the lawyer is not given a specific time frame, then he can slowly prepare a five-page document over a month’s time.
  2. The offer doesn`t describe conditions that protect the interests of the buyer, such as the seller refusing offers from the competition.
  3. The timing and procedure for the due diligence are either completely unrealistic or not described at all. This often happens when a lawyer is doing this kind of work for the first time in his career.
  4. The terms of the deal are too skewed towards the buyer. This happens when a lawyer tries to show his usefulness and interferes in the negotiation process.

Naturally, so many questions make the buyer’s head spin and he either falls into a stupor or rushes headlong into a whirlpool.

Of course, the best approach in this situation is to familiarize yourself with the proposal preparation process in advance (CLASS Business Search).

However, if there was no time for taking a class, then at least adhere to the following rules:

The buyer determines the key parameters of the transaction

What will be bought? At what price? How long does it take? The buyer can confer with consultants, but the last word is with him. Learn about the help of consultants in our article "Who checks the business."

The lawyer draws up a contract based on the interests of the client

The lawyer must check all the wording for their unambiguity, as well as in terms of protecting the interests of his client.

At this point, special emphasis should be placed on the fact that the lawyer shouldn`t change the parameters (essential conditions) of the transaction. If a lawyer says something like: "The price is too high, offer less," then the first question to him is: "Is this your area of ​​expertise?" Usually, the answer is no.

The buyer links the terms of the deal with an immigration attorney

The terms of the deal could disqualify the business in terms of immigration. Therefore, it is important to discuss them with your immigration lawyer BEFORE making a proposal to the seller.

The most common situation is the incorrect advice to formalize the transaction in the form of an asset sale (instead of a sale of shares). Doing this can delay getting a green card for years.

Take our CLASS Business immigration to better navigate this matter.

Read more about why it is important to consult with an immigration lawyer here.

The lawyer makes an audit of all changes proposed by the opposite party

The counter-proposal of the opposite party can change the unambiguity of the wording and add conditions that violate the interests of the client.

Negotiation is a dynamic process. The negotiated contract could undergo dozens of changes before the parties reach an agreement. Some of these changes may be so detrimental to your interests as to make the transaction unacceptable to you.

You will learn how all this is done in the Business Search class.

In conclusion

The author on the stage 3

Preparation of an offer (contract) is a rather complicated matter. It requires the professional support of a lawyer. However, the work of a lawyer should have clear boundaries:

  1. The time during which the documents must be prepared.
  2. The content and scope of the lawyer`s work
  3. And the areas in which it is better not to intrude.

 

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