How to select professional advisors for your business

When buying a business, the purchaser must eventually use the services of professional advisors.  In particular, it is critical that the purchaser obtain legal and accounting advice sooner rather than later.  Consulting with lawyers and accountants early in the negotiation process can usually save both the purchaser and the vendor time and money.  Because of the costs associated with hiring a lawyer, accountant or other professional, some people are inclined to try the do-it-yourself approach.  This can be a short-sighted decision and can prove to be very costly.  For instance, people who process their own personal income tax returns rather than hiring an accountant may miss out on small business tax exemptions that could save far more than the cost of an accountant’s time.  A person who signs a long-term lease or contract without having it reviewed beforehand by a lawyer may regret it for many years to come.  If you are in a partnership or are a shareholder in an incorporated business, you may not find out until it is too late that your partner or partners have the ability to buy you out for less than the value of your share of the business and without you being able to prevent it.

You may already have an established relationship with some advisors but they may not have the specific experience that you will require.  Fore example, a lawyer may have a background in family law but little or no expertise in the area of business law.  You would not go to a paediatrician if you needed brain surgery.  You need to find the person with a successful track record in the specific area you require.  The y key professionals that you may need are:

  • An accountant
  • A lawyer
  • A business broker and
  • An insurance agent

All these professionals serve different functions.  You must be selective in you screening process and in the advice you accept from each advisor.  Each advisor has a specific area of expertise and the advice that you receive from that advisor should be confined to that specific area: a lawyer should give you legal advice not business advice.  Consider the following factors when selecting a professional advisor:

  • Their professional qualifications
  • Their competency
  • Their experience in the specific area you are interested in and
  • Their fees for service

Competency includes timeliness.  If the professional is unable to provide you with what you need within the time-frame required, it may be that you lose your opportunity.  It is helpful to prepare a list of questions that allows you to qualify each advisor n the above areas, plus other questions relating to your specific needs.  Some people may feel uncomfortable discussing fees and qualifications with a professional, but it is important to establish these matters before you make a decision to use that person’s services.

Remember that these people are advisors.  They are not responsible for making the decisions.  That is your responsibility.  It is your money, your risk and your life.  The advisors can only give you the options and the possible consequences.