By: Viraj Shah

Before, during, and after a business transaction, legal counsel should be consulted for a proper legal review of the transaction.

Clarity

Despite “legalese” being long-winded, and in many cases, opaque, having things detailed in writing leaves no doubt about the parties’ rights, responsibilities, and involvement in any business transaction. Attention to detail is crucial in building clarity so that there is no confusion. When all parties know where they stand, then the transaction can go forward without hassles or fear. The disputes that could arise from a lack of clarity would not only cause problems with the transaction in question but also erode trust between the parties. It could even devolve into a series of lawsuits or other disagreeable results. Also, federal, state, and local laws governing business transactions require such clarity for a series of reasons, not the least of which is to make adherence to the law precise.

Evidence

This ties in with the legal requirements. Were there to be disagreements about the relevant transaction, or transactions, meticulous documentation will settle them without question. As the saying goes, “It’s not personal. It’s business.” People forget things, which isn’t unusual when it comes to the reams of paperwork that go into large business transactions. Putting the documentation through a rigorous legal review before signing it is just wise. Having the evidence is good for all parties involved, providing peace of mind about both the transaction itself and being able to refer back to the information at a later date if necessary.

Risk Management

Uncertainty breeds risk. Certainty isn’t contentment and total safety, however. Rather, it’s part of an overall strategy to reduce risk. Of course, “anything can happen.” But, by doing your due diligence in preparing for any business transaction, you can devise solutions for disagreeable events that could happen. Obviously, you can’t plan for everything, but adequately preparing mitigates any risk as much as possible. And, if you show that you’re practicing wise and responsible risk management, then that’ll build confidence in not only the people with whom you’re transacting business but also in your customers and the general public at large.

The Perils of Having Done it Wrong

Imagine that you conclude a business deal and believe that you’re going to earn 10% of the income of a business with which you merged. You budget for those funds. You plan long-term strategies as well. Then, you come to find out that you accidentally signed a contract that entitled you to 1% of that company’s growth and not 10%. Suddenly, all the work you’ve already done is invalidated simply because you failed to do your due diligence. Although this would be a grim experience, it’s only one of many examples of what might go wrong if you don’t pay enough attention to the paperwork when it comes to your company’s business transactions. Undoing the damage would require great expense and inordinate amounts of time, and that doesn’t even include all the extra time that would have to be devoted to redoing all your plans and strategies.

Disclaimer: “The content in this article is provided for general knowledge. It does not constitute legal advice, and readers should seek advice from qualified legal professionals regarding particular cases or situations.”

Published by: Nelly Chavez