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Step one when buying or selling – engage knowledgeable legal counsel

February 6, 2024
Step one when buying or selling – engage knowledgeable legal counsel
          Most of you sell your accounts or company once in your career and lifetime.  It’s a dramatic event, emotionally and financially.  What makes it worse is that you need to rely on lawyers and tax experts to accomplish the transaction, as well as key members of your staff, some of whom may not be thrilled with the prospect of you retiring or selling to another, soon to be their boss or the one to tell them they are not welcome to keep working for the company.  The entire process is likely foreign to you and you’re naturally uncomfortable.  And you should be.
          The sale or purchase process should start with engaging counsel, an attorney familiar with the alarm industry.  Keep in mind that often the buyer of accounts is active in the buying market, “done it before, in fact many times” and has house counsel and standard form for Asset Purchase; all ready to ram the deal down your throat, sugar coating it by assuring you it’s all routine and “this is how it’s done”. 
          It’s your experienced attorney who should be able to guide you as to whether your transaction is progressing with appropriate paperwork that properly addresses the deal you think you’re getting.
          Note that I recommend engaging counsel before you select your broker, if you’re going to need or have one.  The broker will also want a contract signed and likely have no experience or special knowledge of what should be, and what shouldn’t be, in that broker agreement.
          Too many of you contact me after you’ve gotten an NDA and provided the other party [buyer usually] with your confidential information.  Not all NDAs are the same; in fact few have the essential provisions found in the K&K NDA form.
          It’s not uncommon to look for legal counsel after you’ve accepted an LOI.  The LOIs are also not uniform, and like an NDA can have all kinds of provisions that lock you in and don’t belong in that kind of document.  These document can be the creation of someone as inexperienced as you, or someone a lot slicker than you.  You don’t see these agreements on an almost daily basis, obviously.
          What got me started on this topic is really the suggestion that you engage legal counsel who will be around and can help you when the deal doesn’t go as expected or hoped for; usually a post-closing dispute about the guarantee and the holdback fund; possible exposure beyond the holdback.  Most “transactional” attorney do not provide assistance when post-closing disputes end up contentious and in lawsuits.  They just aren’t familiar with handling the disputes [they also don’t have the foresight to see a potential dispute, let alone how it would be handled and by whom].  If you want to spot a transactional attorney who won’t be there when the matter ends up in dispute, just look for the provision in the agreement that calls for jurisdiction and venue in Delaware [when you and other party are not in Delaware].  Some of these same guys go from one agreement to another with an elaborate plan to handle dispute resolution or insist on an arbitration forum that will end up costing you more time and more money that the dispute is worth.  They don’t realize or care what kind of nightmare they are setting you up for.  So the answer is that besides a “transactional” attorney you need a “litigation” attorney.  Problem is that most attorneys are neither, and even less, both.
          Yes I do have an answer and recommendation for you.  Engage K&K; we have both transactional and litigation experience, and we apply that knowledge in every deal with do.  It’s more important that you think, especially when you need us.  Sure most deals go smoothly and that’s everyone’s goal.  But a properly worded agreement actually makes it more likely that a deal with start and end smoothly, because it should leave little room for uncertainty; clarity is the key in any deal.
          If interested in selling or buying K&K transactional team is one phone call away.  My number is 516 747 6700 x 301.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301