Who you actually need when you sell your business, what each one does, and where owners get hurt in the gap between them.

Go search “do I need a lawyer to sell my business.”

Read the first page of results. Then look at who wrote them.

Almost every one is published by a business brokerage. They’re not lying to you. But you’re asking whether you need a lawyer, and the answer is coming from the party whose fee depends on the deal closing.

So here’s the answer from the other chair.

What a broker actually does

A good business broker earns his fee. I’ve closed deals with brokers who made me money and made my client money, and I’ll say that plainly before I say anything else.

What he does:

• Prices the business and tells you what the market will actually pay
• Prepares the marketing package, the blind teaser, the financial summary
• Finds buyers you’d never find on your own
• Runs a process, which is the single best price-raising tool that exists
• Screens out tire-kickers before they cost you three months
• Keeps the deal moving when both sides go quiet
• Absorbs the emotional weight so you’re not negotiating with the guy who’s about to buy your life’s work

That last one is worth more than owners expect. Selling a business you built is not a rational process. Having somebody between you and the buyer is worth real money.

Competition is what raises price. If a broker brings you three buyers instead of one, he’s already paid for himself.

What an attorney actually does

Different job entirely.

• Structures the deal: asset sale or stock sale, and what that decision does to your taxes and your risk
• Negotiates and drafts the letter of intent, which is where most of your leverage lives and dies
• Drafts or redlines the purchase agreement, all sixty to a hundred pages of it
• Negotiates your representations, your indemnification cap, your basket, your survival period, your escrow
• Builds the disclosure schedules, which are the cheapest insurance in the transaction
• Handles consents: landlord, lender, franchisor, licenses, government contracts
• Negotiates the non-compete you’re going to live under
• Manages the closing and the post-closing obligations
• Owes you a fiduciary duty and gets paid whether or not the deal closes

The broker’s job is getting you to the table with the best buyer. Mine is making sure the number on page one is the number you actually keep.

Here’s the uncomfortable truth

Those two jobs sound cleanly separated. They aren’t.

There’s a stretch of every deal where the broker is still driving and the documents have already started to matter. It runs from the first serious offer through the signing of the letter of intent. That stretch is where owners get hurt.

By the time most owners call a lawyer, the LOI is signed.

And an LOI is not a formality. Two things in it are usually binding: exclusivity and confidentiality. Exclusivity means you’ve agreed to stop talking to every other buyer for 60 or 90 days. The moment you sign it, the competitive process the broker built for you is over, and your negotiating position is the weakest it will ever be.

Everything else in that document is not binding in the legal sense and is completely binding in the practical sense. Every term you left vague is a term the buyer’s lawyer gets to draft first. Every point you didn’t raise is a point you’re now raising after you’ve given up your leverage.

I’ve read LOIs where an owner agreed, in one sentence he skimmed, to an uncapped indemnity. That means he could be liable for the entire purchase price after he’s already spent it. He didn’t know he’d agreed to it until we were forty days into drafting.

What is actually binding in that document, and what to settle before you sign it, is covered in Letter of Intent: Selling a Business.

The forms problem

A lot of brokers hand you documents. A listing agreement. An NDA. A letter of intent, sometimes a whole template. Often an asset purchase agreement pulled from a form book.

Those documents are real documents with real consequences.

A form agreement is written for the average deal, and there is no average deal. It doesn’t know your customer concentration. It doesn’t know your biggest contract can’t be assigned. It doesn’t know your permit is in the wrong entity’s name, or that one of your contractors should have been on payroll for six years.

Every one of those becomes a rep you’re making. And you make it on a form that was never written about your company.

Ask the person handing you the form who represents you in that document. Then ask what happens to him if the indemnity clause turns out to be a problem two years from now.

Texas: who’s licensed to do what

This part surprises people.

Texas does not license business brokers. There is no state exam, no continuing education requirement, no board that can take away a business broker’s ability to practice. A man can print a card that says business broker tomorrow morning.

A real estate license is a different question and depends on what’s being sold. Personal property is not real estate. A pure business sale, where what changes hands is goodwill, equipment, inventory, contracts, receivables or equity, generally doesn’t require a real estate license. Once real property is part of the deal, the real estate component falls under the state’s real estate licensing rules and someone in the transaction has to be licensed to handle it.

Licensed Texas attorneys are exempt from the real estate licensing requirement when they’re providing legal services.

There are voluntary credentials in the brokerage world and the good brokers hold them. But voluntary is the operative word. Nobody is required to have one.

Compare that to what stands behind a lawyer. A bar license. Malpractice coverage. A grievance process. A fiduciary duty that is a legal obligation, not a customer service posture.

None of that makes a broker bad at his job. It means the accountability structures are different, and you should know that before you decide who’s handling which part of the biggest financial event of your life.

Follow the incentives

Not a criticism. Just arithmetic.

A broker is paid a success fee. He gets paid when the deal closes and he gets nothing when it doesn’t.

That’s a terrific incentive for closing. It’s a poor one for two sentences you sometimes need to hear:

“Don’t sell yet.”

“Walk away from this one.”

I’ve sat across from owners who should have waited three years, fixed the owner dependency, and sold for twice the money. Nobody in the room was paid to tell them that.

My fee doesn’t move based on whether you close. That’s not virtue. It’s structure. And structure is what you should be looking at, because good people respond to incentives whether or not they mean to.

Ask both of us the same question: what do you get paid if I don’t do this deal? Then listen to the answers.

So who do you hire?

Both, usually

On most sales in the one to fifty million dollar range, both, and they should be talking to each other. The broker runs the market. The lawyer runs the documents. When they work together the deal goes faster, not slower.

Lawyer only

When the buyer already found you. It happens more than people think. A competitor, a customer, an employee, a private equity group working your industry. You don’t need someone to find a buyer who’s already sitting in your conference room. You need the deal documented properly and you need someone testing whether the offer is any good, because an unsolicited offer with no competition is usually below market.

Also lawyer only when you’re selling to family, to a partner, or to your management team. There’s no market to run. There’s a relationship to protect and a document to get right.

Broker first, lawyer soon after

When you have no idea what it’s worth and no idea who’d buy it. Let the broker price it and build the process. Bring me in before the letter of intent, not after.

Neither, yet

If the business can’t run without you for 90 days, you’re not selling a business. You’re selling a job that nobody else can do. Fix that first and you’ll change the price by more than any broker or lawyer will change it at the table. That’s what exit planning is for.

What it costs

Broker fees are usually a percentage of the sale price, paid at closing, and they vary with deal size. Investment bankers on larger deals typically take a retainer plus a fee.

Legal fees vary with the size and complexity of the deal. Ask for an estimate up front and ask exactly what’s included, and be careful with anyone who won’t give you a range.

Here’s the comparison that matters. On a five million dollar sale, an indemnification cap you didn’t negotiate can expose you to millions. A purchase price allocation nobody fought over can cost six figures in tax. An earnout with a loose definition can quietly erase a fifth of your price.

The legal fee is not the expensive part of your transaction. The clause nobody read is the expensive part.

The one question

If you remember nothing else from this page, remember to ask every professional in your deal one question:

Who do you represent?

The broker represents the transaction. The buyer’s lawyer represents the buyer, and that’s his job, not a character flaw. The accountant represents the numbers.

Exactly one person in that room has a legal duty to represent you.

Make sure there is one.

Frequently Asked Questions

Do I need a lawyer to sell my business?

You need someone whose only duty is to you drafting and reviewing the purchase agreement. A broker can’t fill that role and shouldn’t be asked to. The buyer’s lawyer is working for the buyer.

Can a business broker draft my purchase agreement?

Brokers commonly provide forms. What you should understand is that a form was written for a generic deal, it wasn’t written about your company, and the representations in it are yours to make and yours to answer for.

Do business brokers have to be licensed in Texas?

Texas does not license business brokers as such. A real estate license comes into play when real property is part of what’s being sold. Professional credentials in the brokerage industry are voluntary.

Can my attorney also find me a buyer?

Sometimes, through the network he’s built doing this work. What an attorney generally isn’t doing is running a full marketed sale process, which is what a broker or an investment banker is built for.

When should I bring in a lawyer?

Before you sign the letter of intent. That is the single highest-value moment in the transaction and it’s the one owners routinely miss.

My broker says his lawyer can handle the documents. Is that fine?

Ask who that lawyer represents in your transaction and get the answer in writing. One lawyer cannot represent both sides of a negotiation where the interests genuinely conflict.

Is a broker worth the fee on a small deal?

Often yes, because competition raises price and most owners can’t create competition alone. If a buyer has already approached you, the math changes and it’s worth asking whether you need a marketed process at all.

What if I’m selling to my partner or my kids?

There’s no market to run, so a broker adds little. The documents matter more than usual, not less, because the relationship survives the closing and the terms are what everyone will remember.

One Hour. One Price.

Sixty minutes on the phone. Just you and me, talking about your business.

I’ll tell you whether you need a broker, whether you need me, and whether you should be selling at all right now.

It costs $1,000.

Most business owners get one shot at their exit. One. The cheapest hour you’ll spend on it.

This page is general information about how business sales work in Texas. It isn’t legal advice and reading it doesn’t make me your lawyer. Every deal is different, and the details are where the money is.