In a recent posting, I outlined what attorneys do to help business people buy and sell companies. An attorney’s role in a company sale includes helping the parties with getting ready for sale, contract negotiation, financing, due diligence review, and closing.
Of course, one of the initial questions I get from clients seeking a lawyer to help with a company sale is “How much are the legal fees for a company sale?” I’ll talk in terms of number of hours. If your lawyer charges an hourly rate, you can then do the math. Here are some general guidelines on attorney hours required for the phases involved in a relatively straight-forward small or medium-sized company sale:
- Drafting and Negotiating Term Sheet, 5 - 10 hours
- Drafting and Negotiating Purchase Agreement, 10 - 20 hours
- Conducting Due Diligence Review, 10 – 15 hours
- Drafting and Negotiating Ancillary Documents, 20 – 40 hours
- Handling Closing and Post-Closing Matters, 10 hours
Hours required will vary greatly depending upon which party has responsibility for drafting the various agreements and how much negotiation is required to reach agreement. Attorney hours required can increase significantly if a problem is uncovered or develops and must be remedied prior to closing. Sample problems include chain of title in property to be conveyed; difficulty obtaining required third party or governmental consents; and a party’s unwillingness to assume potential liabilities uncovered during due diligence.