BROKER OR ATTORNEY - DO YOU NEED EITHER TO SELL OR BUY
I really enjoy and appreciate the forum you have provided uniquely for the Alarm industry.
My question is to all of us in the Alarm industry thinking about selling our businesses one day.
Many articles and opinions including in this forum have discussed the role played by a Broker and an attorney in finding the appropriate Buyer and negotiating the best "legal" course for you the seller. The question asked by some is a Broker and an attorney really necessary? Why not just an attorney? Or just a broker? Since this is a Legal binding business transaction It seems that going at it alone without legal counsel is a mistake.
An attorney will be legally obligated to counsel you regarding what is best for you legally. Right? Off course since he is retained and paid by you the seller. Would it be reasonably expected from a Broker retained by you, paid by you, to have your best interest? Business wise?
How about if the Broker is paid by you " Brokerage " fee?
But what happens when the Broker is actually paid also by the Buyer? As referral fee?
Is it possible to be paid by both sides and still have your best interest at heart? Would you trust a stock Broker or an attorney to represent both sides?
It is UNETHICAL in my opinion but I am not a professional legal advisor and shall leave that to the pros. But, Just the thought that a Broker might try to stir you where he gets the largest referral /kickback but not where it is best for you should have you think twice before choosing a broker. An Ethical person will not "double dip" when is paid to represent your best interest. I would like to know please, what others on this great forum think about this subject.
Especially since most of us will sooner or later engage in buying a business or selling their business.
Lot of people probably have opinions on this topic, especially the brokers. The best in the alarm industry are listed on The Alarm Exchange in the Broker category. The best attorneys are also listed on The Alarm Exchange [that's right, only my firm].
Let's start with a few easy propositions. You definitely need a lawyer when selling or buying an alarm business. It's a legal transaction. Can you survive if you don't have a lawyer? Perhaps. Can you drive cross country if you don't have a driver's license and your only companions are Johnnie Walker and Jack Daniels? Perhaps. But you might have a problem. Maybe little problem; maybe big problem. Don't expect Johnnie or Jack to back you up.
Brokers and lawyers serve different roles in a transaction. Brokers help find and connect the buyers and sellers, help structure the deal, find financing, assist with due diligence sometimes depending on what the buyer or seller requests and is willing to pay for. Lawyers can do that too, but generally don't. Lawyers should be able to assist with structuring the deal, making sense of the deal and paper the transaction. I've yet in hundreds of deals had a client ask me to perform due diligence. Once example of that would be checking each contract being purchased. Too costly to have me do it. While brokers are generally paid on commission, lawyers will be paid for their time, some worth more than others. Of course you're better off with a broker and lawyer who knows the alarm industry. That's what we spend our working time doing. Can your lawyer figure out how to get you sold or how to buy the alarm accounts? Sure. But unless your lawyer is specialist there is going to be a big learning curve, and you're going to pay for it, either in more money, a bad deal for you or a deal that has problems during and after the closing.
Can you use one broker or one attorney. Well generally there is one broker, usually representing one of the parties. Seller pays the broker, with buyer's money at closing. Broker could be representing the seller, but even those who specialize in representing sellers won't turn down a large buyer seeking to accumulate accounts. You need to know who the broker represents and owes allegiance to. Since many deals are really straight forward and routine, at least for the alarm industry broker, there often aren't too many contentious issues, and when there are they are business issues that a buyer or seller should be able to figure out on their own.
A lawyer is bit different. Some deals are relatively small and the parties may want to keep legal expenses down or it may be a friendly deal among friends or relatives. I'm not one to make a mountain out of a mole hill. I confess I've represented both sides. Sometimes I've represented both sides for long time and neither would feel comfortable using another attorney. I suppose I could tell both of them that I won't handle the deal for either, but instead I let them know I prepare a simple, straight forward agreement that is fair for both and easily understood by both. Never had a transaction fail or have post closing problems, at least not because of the paperwork or the deal struck.
So that's my take on this issue. Others are welcome to offer their opinion.
By the way, our transaction team is headed by Jennifer Kirschenbaum, Esq. Give her a call at 516 747 6700 x 302 or Jennifer@KirschenbaumEsq.com. She will only represent one of you, so be first to get her on retainer.