April 2, 2020
Last year Virginia regained its title of most business-friendly state in the nation. With an A+ workforce and business education ranking, the Commonwealth is rich in business opportunities. Such opportunities often draw business to business operations into Virginia. Many such businesses assist Virginia companies in navigating everything from formation to acquisition. Business brokers are akin to real estate agents for businesses. They help other companies or individuals buy and sell businesses, but even licensed brokers are seldom authorized to practice law in the Commonwealth. Business brokers cannot provide Virginia buyers and sellers legal advice or prepare legal documents for the acquisition/sale of a Virginia business, and law firms that assist business brokers in doing so are actually participating in the unauthorized practice of law.
Business brokerage is an unlicensed profession in Virginia. Don’t let private brokerage certifications and associations fool you. Anyone, regardless of experience and education, can offer business brokerage services in the Commonwealth. Many inexperienced brokers unwittingly engage in the unauthorized practice of law, which can be detrimental when navigating the complex regulations surrounding Virginia business acquisitions. A closing attorney is not the same as acquisition counsel, and the only way to ensure compliance with Virginia and federal business regulations is to speak with an experienced business transaction lawyer. The Virginia business acquisition and sales attorneys at McClanahan Powers, PLLC, can help Virginia businesses avoid illegal brokerage transactions and effectuate the legal transfer of a business in Virginia. Take advantage of your free Virginia business sales and acquisition consultation with us today by calling (703) 520-1326 or contacting us online.
Business brokers play an important role in marketing and selling businesses in the Commonwealth. Their connections and experience may bring a valuable buyer or seller to the table. However, finding a qualified and professional business broker is difficult in the technological age. Many online business brokerage firms offer brokerage services that don’t comply with Virginia law. Businesses should look for the following red flags when considering a business broker:
It’s wise to start your search for a business broker by contacting an experienced Virginia business services attorney. These attorneys often work with respected business and real estate brokerage firms and can spot red flags in Virginia’s unlicensed business brokerage industry. If you’ve already found a potential buyer for your business, you do not need a business broker. An experienced Virginia business attorney can draft all necessary documents and handle the transfer of business on your behalf. This often reduces overall closing costs and ensures compliance with any applicable state and federal laws.
Virginia’s laws and regulations governing business brokers are scattered because it’s an unlicensed industry. Certain aspects of brokerage, such as the sale of real estate with the business, require a real estate license. This triggers Virginia’s real estate laws and regulations. Virginia common law (legal principles found in cases) may also impose certain fiduciary and ethical duties on unlicensed business brokers. The sale and/or purchase of certain businesses may invoke federal regulatory and anti-trust laws, while parties in different states must determine which law applies. Further, the Virginia State Bar has held that business brokers cannot prepare sales and purchase documents without violating Virginia law. These documents include:
Even if an attorney reviews such documents, this doesn’t erase their illegal preparation. A closing attorney must draft the closing documents, but he/she also doesn’t work for either party. Instead, a closing attorney’s fee is typically paid via agreements regarding closing costs. Only a top-rated business transaction attorney can determine whether the purchase and/or sale of a business in Virginia is legal and beneficial to his clients.
Buying and selling businesses in the Commonwealth of Virginia isn’t as simple as many business brokers make it sound. It’s not a 1-2-3 process, and anyone who claims otherwise isn’t looking out for the best interest of his/her clients. However, an experienced Virginia business transactions lawyer can help Virginia business owners navigate this complex process. Virginia business service and corporate attorneys can handle most transactional negotiations, draft essential sales documents, help secure financing, and protect your interest during closing. If you need help finding a buyer or are looking to acquire a new business, the top-rated Virginia business lawyers at McClanahan Powers, PLLC, can connect you with independent, trusted business brokerage firms in the Commonwealth. Protect your investments and bulletproof your business transactions with McClanahan Powers, PLLC. Call us for your free Virginia business sales and acquisition consultation at (703) 520-1326 or contact us online.