Do you need an attorney to sell your business?

Yes, you need an attorney to sell your business. Specifically one who has done business sales before, not just general contracts or estate work. The purchase agreement in a business sale is a complex document with representations, warranties, indemnification clauses, and earnout structures that can create real obligations for you after closing. You need someone who has read hundreds of these agreements and knows what to fight for.

What a transaction attorney actually handles

The attorney’s job starts before you have a deal and ends at the closing table.

Before the deal:

• Reviewing a letter of intent (LOI) before you sign it
• Advising on deal structure (asset sale vs. stock sale) and its implications
• Helping you understand what you’re agreeing to before you’re locked in

During due diligence:

• Managing the document request process
• Flagging issues that could affect the sale or your liability
• Negotiating how problems uncovered in due diligence get resolved

At the purchase agreement stage:

• Drafting or reviewing the purchase agreement
• Negotiating representations and warranties, the statements you’re making about the business that you’ll be held to after closing
• Negotiating indemnification provisions, who’s responsible if something goes wrong after closing

At closing:

• Coordinating all the closing documents
• Making sure funds transfer correctly
• Reviewing the final closing statement

What a transaction attorney is not

This distinction matters:

• Not a business broker. They don’t find buyers or run the sale process. That’s the broker’s job.
• Not a CPA. They don’t advise on taxes. Get a separate CPA for tax planning.
• Not an estate planner. Different discipline. An estate attorney handles wills and trusts; a transaction attorney handles the sale itself. Some firms do both, but they’re separate expertise.

You’ll typically need at least three professionals in a business sale: a broker, a CPA, and a transaction attorney. They have different roles, and you need all three.

Why general business attorneys fall short

Many business owners make the mistake of using their existing attorney, someone who may have helped them set up the company or review leases, for a business sale. This can be an expensive mistake.

Transaction law is specialized. A general business attorney may not know:

• Standard market terms for purchase price adjustments
• How to negotiate a working capital peg
• Common buyer representations and warranty insurance
• How earn-out structures typically work
• What indemnification caps are standard at different deal sizes

An attorney who has done five business sales in the last two years knows these things. One who hasn’t done any recently often doesn’t.

The stakes in the representations and warranties section alone make specialization worth the cost. A 2021 SRS Acquiom deal terms study of over 2,200 private-target acquisitions found that 98% of deals required the seller to represent there were “no undisclosed liabilities.” If that representation turns out to be wrong, buyers can file claims against escrow or pursue indemnification. The standard general indemnification escrow is 10% of the transaction value. On a $1.5 million sale, that’s $150,000 sitting in escrow after closing, subject to buyer claims for 12 to 24 months. An attorney who negotiates these provisions daily knows which representations to push back on and which escrow terms are standard. One who doesn’t may simply accept the buyer’s first draft.

Finding the right attorney

Questions to ask:

• How many business sales have you handled in the last two years?
• What size range do you typically work in?
• Do you represent sellers, buyers, or both?
• What does your fee arrangement look like for a deal in my range?

A good transaction attorney in your deal size range will answer these questions directly. If they’re vague, keep looking.

On fees: experienced transaction attorneys typically bill $300 to $600 per hour. Total legal fees for a straightforward sale under $2 million usually run $5,000 to $15,000. More complex deals with multiple entities, real estate, or contentious negotiations can exceed $25,000. Some firms offer flat-fee arrangements for smaller asset sales, which can simplify budgeting. Either way, the cost is modest compared to the indemnification exposure and escrow risk you’re navigating. Sellers who skip attorney representation or use an underprepared one often discover the cost later, after closing, when buyer claims arrive.