The Benefits of Using a Broker in Selling a Law Practice
Regarding the sale of a law practice, it is reasonable to say that there is a distinct lack of communication, opportunities, and knowledge in the professional marketplace. While you may know that you want to buy or sell a practice, you may not know where or how to start. Speaking with a law practice broker may provide you with the right tools to accomplish this goal and overcome knowledge deficiencies.
What is a law practice broker? The goal and purpose of the law practice broker are to help organize, prepare, value, promote, negotiate and package a deal for the sale of the practice. What does this entail? Generally speaking, a broker will use his or her skills, expertise, connections, and other tools to promote and develop your knowledge, awareness of market opportunities, and overall ability to get the deal done. More specifically, this includes:
- Listing the practice, finding the right practice to buy, and otherwise exploring the marketplace;
- Connecting you with key advisors;
- Developing marketing and listing strategies;
- Assisting in practice valuation and valuation improvement strategies;
- Assisting with preserving and transferring goodwill;
- Negotiating, and facilitating the negotiation of, key deal terms and otherwise bringing the parties to the table;
- Reviewing and discussing exit strategies and opportunities;
- Providing alternative growth options;
- Ensuring confidentiality in the sale process;
- Expediting the process and keeping it moving;
- Allowing you to focus on your business;
- Assisting in practice transition;
- Facilitating closing and accomplishing checklist items; and
- Developing an overall plan for transferring the practice.
The broker is motivated and incentivized to help you make the sale, so you may question the motives of or need for the broker. But the simple truth is that the broker can often be the difference between closing the deal and it falling through. Buyers and sellers often have substantially differing opinions on what constitutes a “fair” deal. From price amount, structure, and allocation, to limitations and qualifications of representations and warranties, to post-closing transition requirements, there are many opportunities for discord among the parties. And while it is typically the job of the attorney to hammer out these terms and prepare and revise the purchase agreements, it is the broker that often can get past the recalcitrance and get the parties talking.
The benefits of having the right law practice broker to guide and assist you through the purchase and sale process often more than justify the commission. How do I find a buyer? Is the seller asking too high a price? Does the buyer have the right qualifications? Is the market share and growth outlook of the seller the right fit for your practice goals? These are complicated questions that often take a qualified and experienced broker to help you fully understand. And while you may feel comfortable or qualified to or sell a practice based on your experience as an attorney, you can still benefit from speaking with a broker.
As you begin considering purchasing or selling a practice, take the time to speak to a law practice broker. Whether you move forward with his or her services, you will almost certainly benefit and learn from the experience.