I called my lawyer the other day and asked, May I ask you three questions for $100? Sure, he replied. What are the next two questions?

Lawyers are in the business of selling time. Those of us in the car wash and storage businesses sell time too, but we often dont consider it our most precious asset. In fact, most every business known to man is the business of time. The twist with lawyers is they sell time along with safety, advice, comfort and protection against many unknowns that can harm us legally.

If you want your business to be a legal entity, you must hire legal representation. We need lawyers, whether we like it or not. The simple fact is if you want the 800-pound gorilla legally off your back, contract a lawyer.

When shopping for an existing business, youll need to consult with a lawyer to produce, interpret and translate documents into non-legalese so that you can understand what youre getting intohopefully, not someone elses legal baggage. Recently, I decided to buy another car wash. I needed my lawyer to ensure I was acquiring all the assets and none of the liabilities. In other words, I didnt want any of the baggage of the existing corporation.

Documentation

The first item youll need is a letter of intent (LOI), a document that spells out your interest to acquire the property and includes basic terms of a forthcoming purchase. LOIs are straightforward, short documents that are the first building blocks of formal agreements.

Once the LOI is accepted, you move to step two, the formal purchase agreement. This is far more complex. Here you define the specifics of the acquisition: price, closing dates, what is or isnt included, trademarks, namesbasically, all intellectual and physical properties involved in the purchase.

Working through documentation involves a great deal of back and forth through the renegotiating process. This is OK, because once the agreement is presented and a deposit accepted, you, the buyer, enter into the due diligence phase. Here, youll go through every document, physical record, tax return, utility bill, etc., to verify your assumption under the LOI and agreement of sale.

The Rest of the Story

At this point, you may ask yourself, Did I pay too much? Or maybe youll congratulate yourself for being so clever! It doesnt really matter because many further discussions will ensue before closing.

While youre enraptured with all the legal, binding agreements, your lawyer becomes your guiding light. One note of caution: Dont forget that its your deal, not your lawyers. Lawyers are not deal makers; they are deal facilitators. Be sure to ask questions and make your wishes well known.

Concurrent with deal-making agreements, youll need legal oversight on bank loan and real estate transfer documents. These vary in length and complexity depending on loan details and lender.

No matter how simple and shortor long and confusingthey may be, dont forget the legal documents youre signing will tie up your assets until you repay whats borrowed. The paperwork can be overwhelming, even with the guidance of your attorney.

The Road Is Long

By now you might think youre finished. In reality, this is only the beginning! Other documents must be prepared on ownership and operations, specifically relating to health, insurance, state, city and federal requirements. Items that fall into daily relationships with other stakeholders also need to be considered and created.

Yes, acquiring and running a business is not for the faint of heart. It requires imagination, intestinal fortitude and perseverance. Be diligent in your business search and choose your legal representation with great care. 

Fred Grauer is president of Grauer Associates and executive vice president of investor market and conveyors for Ryko Manufacturing Co., a car wash equipment manufacturer in Grimes, Iowa. He has made a lifelong career of designing, selling, building and operating car washes. He can be reached at [email protected].