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How to choose a lawyer for a business sale

See all articlesChoosing a lawyer for your business sale
Selling a business
Kieran Ellis
Kieran Ellis
June 6, 2019
minute read

Choosing a good lawyer can increase the chances of a successful business sale

When selling a business, there are two key legal steps which can make or break a transaction. The first is preparing for legal diligence and determining if there are any deal breakers or hurdles which may impact a successful sale. The second step is to prepare extensive legal agreements for a transaction.

These stages can be very delicate, especially if you're entertaining an enticing yet unsolicited offer to acquire your company, so getting the right legal services is an essential part of ensuring they go smoothly.

Why do you need a lawyer for a business sale?

Mergers and acquisitions law is a specialist and complex field of law which applies to transactions.

Transactions can take two different forms: a share sale or an asset sale. Both require specialised legal agreements that are drafted by the vendor's legal representative. In addition to the main sale agreement, there will frequently be more than ten other agreements or documents that will need to be prepared as part of the sale.

The benefits of choosing the right lawyer

Business owner speaking to lawyers

Get a better outcome from your business sale.

While there are some tasks and documents which can only be prepared by an experienced lawyer, there are many other benefits of having a good lawyer on your side during a business transaction.

Having a good law firm engaged early in the sale process should:

  • Improve the probability of a successful transaction
  • Increase the net financial benefit that the shareholders receive
  • Minimise the risks that you take on as a vendor for the future
  • Reduce the transaction anxiety and headaches that you are likely to experience during the transaction
  • Help you to learn some useful knowledge and skills that may assist you in the future

How do you choose the right lawyer?

There are a limited number of firms in each major city which specialise in mergers and acquisitions law.

For example, the average suburban law firm that deals with property transactions, family law, and small legal matters is unlikely to have the experience or the depth of team necessary to work on a medium-sized business transaction.

Additional complexity of business transactions come from earnouts, deferred arrangements, or transactions where the vendor retains a shareholding for the long term.

The key things to look for in a good lawyer or law firm include:

  • A partner or director with more than 10 years of transactional experience
  • A firm that has worked on small and large transactions
  • A team of at least three individuals in the mergers and acquisitions department
  • The ability to explain key terms and processes in basic language rather than legal speak
  • Any potential conflicts with the logical prospective buyers

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