Attorneys & Chainsaws: Dangerous Yet Useful Tools

If you’ve never used a chainsaw, you’re probably at least, familiar with them. They are a powerful handheld tool with a rapidly-spinning, razor-sharp chain attached to them. Let me tell you, using a chainsaw is a workout. By the time you’re done using it, you’re completely exhausted, and your back and arms hurt. However, beyond all of this, chainsaws can be quite dangerous, and should be handled with extreme caution.?

When I was 19 years old, I had an accident with a chainsaw. Back then, I owned a landscaping business, and I loved getting my hands dirty, doing the work. On this particular day, I was perched high in a pine tree and trimming branches. Having done this many times before, I was following the normal safety procedures (harnessed and wearing tree spikes on my boots). When the job was done, I let go of the chainsaw. Now, this was also part of the standard procedure, but the chain didn’t stop as it was supposed to. To this day, I still have many nasty scars on my calf and a very healthy respect for these powerful tools.?

Rules of Engagement

Despite the potential danger, a chainsaw is a very useful tool. In fact, I use my chainsaw pretty frequently around the farm. We’ve had a few major storms, felling trees, over the years and I’ve had to use the chainsaw to clear the road that leads up to our farm. Likewise, I use it to cut firewood for our family. Like I said, it’s a useful tool. But because I am also aware of the potential danger that comes with using it, I’ve established a few rules to protect myself and those around me on the occasions that I need to use it.

1. Always be sure the chain is razor-sharp.
2. Only use the chainsaw for as long as you can safely do so (listen to your body); then stop.
3. Keep your focus entirely on the task while using the chainsaw.

Business Owners Need a Sharp & Powerful Attorney for the Business Sale Contract

One of the members of your professional advisory team can leave you feeling as though you’ve just wielded a chainsaw through a forest… your attorney. Like the chainsaw, your attorney can be a powerful tool, but must be handled with the same set of rules.

1. Select the sharpest attorney available for your business sale advisory board. A well-seasoned attorney with expertise in the business sale process is especially useful. Their attention to detail can cut right through the threats you and your business will face during the process, ensuring your wellbeing.?
2. Work with the attorney for as long as the sale is in progress; then stop. Just as the chainsaw wears down your muscles, the endless paperwork and legal jargon can leave you weary. However, it is necessary for the full duration of the business sale process. Without your attorney, you’re much more likely to fall into a legally-binding “trap” or unfavorable situation. Therefore, continue working with your attorney until the deal is finalized or disrupted.
3. Remain 100% focused on the legal tasks in front of you. You will be asked questions time and again. Sometimes, you will answer questions you’ve already answered. Regardless of the workload, you must be mentally present and prepared to answer every question your attorney has for you.

Your Attorney is Necessary to Build a Business Sale Contract

When selling your business, you will encounter a mountain of contracts, documents, and agreements. Each one is filled with terms, conditions, clauses, subclauses, etc. that will require the knowledge, wisdom, and keen eye of your attorney.?

When you enter the sales process, there’s a natural give and take that occurs between the buyer and seller. This often begins with a term sheet, outlining the individual’s desire to buy the company and the terms ensuring they do so. Once the term sheet has been passed from one party to the next, the recipient reviews the terms. They will remove the parts they don’t like and add a few of their own terms. This continues until an agreement is reached or until negotiations break down.

Assuming an agreement is reached, your attorney will draw up the written terms of the sales agreement, accurately portraying both parties’ interests and desires. This contract outlines many terms and conditions through complex legal jargon. Thus, making it necessary to work with a razor-sharp attorney. They will work through the contract with great care, precision, and stamina.

Elements of a Good Business Sale Contract

Throughout my career, I’ve encountered more contracts than I can count. Some have been good. Others have been okay. But I’ve seen plenty that I wouldn’t sign if my life depended on it. Each state and jurisdiction require state or region-specific details. A sharp attorney will be able to interpret the laws and draw up a contract.?

So, what’s in a good business sale contract? I’ve found six recurring elements in each of the best contracts I’ve encountered throughout my career. Each individual business will include industry and business-specific provisions, but these are the six basic elements of a well-written contract.

1. The offer
2. Acceptance of the offer
3. Consideration of the details
4. Mutuality of obligation
5. Competencies and capacities
6. Written and recorded specifics

Beyond these basic elements, there are a handful of additional provisions to consider.

Additional Provisions Needed in the Contract

1. Ability to choose a closing venue
2. Allowable time extensions and term expansions
3. Coverage of attorney fees in closing costs and buyer loans
4. Provisions for termination
5. Hold-harmless Indemnification Clauses
6. Market exclusivity demands

As you can see, you could very easily find yourself in the weeds with each of these provisions. However, there are still many more that could be included in your business sale contract. Therefore, it’s vital for you to have a sharp attorney on your side. They will understand each of the complicated terms and legal requirements of your contract.

Take No Shortcuts with Your Contract

Ultimately, the business sale contract is your responsibility. You could have the best attorney in the world, but you still must conduct your own due diligence to ensure the contract meets your own expectations. In order to protect your interests, double-check your attorney’s work in these six steps.

1. Read the sales contract?thoroughly.
2. Make sure it contains the terms to which you agreed.
3. Take out irrelevant terms and conditions.
4. Delete duplicate statements.
5. Ensure fairness to both parties.
6. Prepare for what-if scenarios.

Common Tricks of the Trade

Perhaps the greatest advice anyone could receive when reviewing their business sale contract is this… be vigilant! Don’t be afraid to ask questions. If anything looks amiss, speak up. Attorneys often use “tricks” to sidetrack or derail business owners or buyers. It’s almost like a written sleight of hand. Therefore, you must take extra care to look for the following common tricks of the trade within your contract.

1. Tricky formatting. Sometimes, lawyers remove margins from the document, preventing you from taking notes. Likewise, they might print the contracts front-to-back, making you work to read the “flip chart” style document.
2. Main point distractors. Oftentimes, lawyers will include the main points of the contract on the front page, so the interested parties won’t look into the details included in the following pages.
3. Generic word use. If a lawyer uses words like “standard,” “regular,” or “common,” make sure the clauses pertain to your business sale.
4. Definition changes. This is one of the more dangerous tricks attorneys play. Sometimes, they will “adjust” definitions in the contract. Because you expect the definition to read a certain way, you don’t catch the change.

See it Through

The information I’ve shared today just outlines the basics of legal work. It’s why I say your attorney is like a chainsaw. When you’re ready to sell your business, you’ll need to have a razor-sharp attorney that can cut through the potential hazards in your business sale contract, protecting you from the legal ramifications.?

By the end of the sale, you’re going to be exhausted. Therefore, you need an attorney who can see it through, helping you to reach the finish line.