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When you have made the decision to sell your business, one of the considerations you will need to address is whether to use the services of a business broker for the transaction. Do you really need a business broker, or can you just sell your business on your own?
The short answer is yes, you absolutely need a business broker.
What follows is the fifth in a series of articles listing the reasons why the services of a business broker are essential for a smooth and successful business transaction. Mistakes made during a business transaction, many made simply because of the inexperience of the business seller, can be extremely costly. The fees you pay to utilize an experienced broker can be more than justified by avoiding these major blunders.
#5: Protection from Legal Issues
It is a sad reality of our litigious society that lawsuits are filed each and every day. For those in the process of selling a business on their own, the threat of lawsuits is a real and costly one.
Recent research has found that almost one-quarter of all business transactions that close end up in some sort of litigation. These litigations stem from issues like improper contracts, buyers who may feel they have been deceived in some way by the seller, buyers whose expectations have not been met, etc.
What is the best way to avoid the cost and frustration of these and other types of litigation issues that arise after the closing of a business transaction? Hire a good business broker.
The process we use cannot possibly avoid all litigation scenarios. What we do instead is provide litigation protection by way of proper documentation as well as education for you and your buyer. There are no guarantees, but in the past litigations against our sellers have been prevented, as well as cases where the mediator has sided with our sellers.
The key to litigation prevention is experience and knowledge, and this is what you get from experienced and knowledgeable business brokers like us. We know the kinds of issues that can arise, and we will not only help protect you if a claim comes up, we will make sure that everything is properly documented to avoid these issues in the first place.
Have you ever had an experience related to business transaction litigation? Have any advice for future business sellers? Do you have any questions about our approach to litigation prevention? Please leave a comment or question here, and we will be happy to get back to you.
Want to read Part 1: Confidentiality? Click here.
Want to read Part 2: Evaluation? Click here.
Want to read Part 3: Keeping Your Business Running? Click here.
Want to read Part 4: Marketing Power? Click here.
Michael Monnot
941.518.7138
Mike@InfinityBusinessBrokers.com
You mentioned that buyers might sometimes feel like they’ve been deceived by a seller and sue them. I’d imagine that it would be really time-consuming and inconvenient for business owners to have to deal with a lawsuit on top of trying to sell the company. If it were me, I’d want to have a business broker in hand to make sure that the sellers don’t have any ground on which to sue.
You are 100% correct, a good business broker should be able to protect you and keep you from the pitfalls of buying/selling a business. A lawsuit would never be the first option but rather the last and sometimes it has been necessary whether it was a dispute about a deposit, lack of training, fraud…as there are always outside factors that we cannot control.