Entrepreneurs are in business to make money, not to deal with legal issues. Even so, everything that a business does happens within a legal framework. When a business takes on customers or deals with suppliers, it enters into contracts. Some will be in writing, many will not, but they are legal contracts nonetheless – and this is just the “tip of the iceberg”. As the business sets up its operations and begins to trade, it will have to comply with health & safety laws. When it takes on employees, there are employment law issues to consider. If the business operates through a company, there is the Companies Act and corporate case law to consider as well.
The list of day-to-day matters where business and the law come together goes on and on. But by their very day-to-day nature, they are areas that the business comes to understand well, and there are usually well-developed processes for covering legal issues that arise habitually as a result of the business going about its daily work.
Two areas which do not tend to come up regularly in the owner-managed business sector are (i) mergers & acquisitions, and (ii) commercial cases before the courts. Businesses do not often face these situations and when they do they need a team of both lawyers and business advisers who can
help them navigate the unusual issues that come up. For example, it is likely that at some stage or another during a successful business’ life, it may be the subject of a takeover offer. Trying to manage this “one-off” episode whilst also managing the day-to-day tasks that made the company successful in the first place can be overwhelming. Entrepreneurs will engage professional advisers who
specialise in buying and selling businesses to help them. It may be the first and, perhaps, last time that the entrepreneur sells his or her business, whereas to specialist advisers who work in mergers & acquisitions it is a common occurrence, not a “one-off”.
There are corporate financiers, bankers and lawyers whose practices are devoted to helping clients who are buying, selling, investing in or providing funding to businesses. They understand the processes involved in mergers & acquisitions well, and appreciate the need for co-ordinated teamwork. They are experienced in ensuring that commercial objectives can be married up with the legal issues and documentation that are all important ingredients in completing a corporate transaction.
Another area where the law and business coincide is in cases before the courts. When a business needs to take legal action or defend a case brought against it, money in the form of damages is often at stake. For example, a contract operated by the business may have broken down. Legal advice will be required to help establish or defend a claim, and often forensic advice will be required to quantify the amounts involved and present the financial impact in a form suitable for the courts. It is an area which is generally alien to the entrepreneur. But again, there are lawyers and accountants who specialise in this work and who have the skills to help. For example, forensic accountants are skilled in writing reports and appearing before the Courts as expert witnesses.
The key to successful outcomes in these “one-off” situations is teamwork. The entrepreneur will not be able to “outsource” all tasks to his lawyers, accountants and bankers when, for example, selling his business or in a forensic case. No one knows his or her business like the owner manager who set it up and developed it. Their involvement will be key, but owner managers often feel they are “on their own” if something unusual needs to be dealt with, such as an offer to buy the business or a commercial case before the Courts.
Harwood Hutton, for instance, helps many, many clients each year to buy and sell businesses, raise finance and deal with cases before the Courts. Our firm works with many other professionals, such as lawyers and bankers, in London and the Thames Valley area, who appreciate the issues involved and have come across countless previous examples of how such situations have been progressed and/or resolved. When business and the law cross paths, it can create challenges that need managing, and the business concerned may need help. But help is at hand even in seemingly “one off” situations.