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Lucy, Esq.
Lucy, Esq., Attorney
Category: Business Law
Satisfied Customers: 29985
Experience:  Attorney
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I am buying a small business (coffee shop). I am a first

Customer Question

Hi,
I am buying a small business (coffee shop). I am a first time buyer. The cost would be 300K. My broker said that for such a business there is no need to hire a lawyer which would cost about $6000. He suggested to hire a CPA to look at the financial records as part of Due Diligence.
The seller is a corporation, owned 100% by the person selling. I have been told that we need to have him sign a personal guarantee and that we need to hire a lawyer to protect us.My question is do we need to hire a business lawyer for such a straight forward business or we can simply save the cost and just have a CPA review things while still being protected?
Submitted: 1 year ago.
Category: Business Law
Expert:  Lucy, Esq. replied 1 year ago.

Hi,

Hi,

I'm Lucy, and I'd be happy to answer your questions today.

A broker's primary interest when helping with a sale is in ensuring that the sale goes through so they get a commission. A lawyer's interest when helping with a sale is to protect the client - which is you. You can, of course, hire a CPA to look at the business records, but a lawyer can help with a lot of things: reviewing the contracts to make sure there aren't any loopholes or harmful paragraphs, negotiating which items remain as part of the sale and which don't (things like dishwashers, espresso machines, tables, etc.) can all be negotiated. A lawyer can make sure you get a non-compete business so the coffee shop owner can't take your $300k and open a new store across the street from yours. A lawyer can create an LLC for you so you aren't liable if someone spills coffee on themselves and sues you. And a lawyer can help smooth any bumps that arise along the way with the sale. If a problem arises AFTER the sale, when your broker is long gone, your lawyer might also be able to help with that.

Don't take the broker's word for it that you don't need a lawyer or what a lawyer will cost. Call a couple of local attorneys who do business transactions and real estate, and ask for an estimate. A good place to see peer ratings and read reviews from former clients is www.martindale.com.

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