Gross & Romanick, P.C. was recently retained by an individual who attempted to purchase a business through a “business broker” intermediary without the advice of legal counsel. The new client paid a substantial sum of money to the broker to hold in escrow until the buy-sell agreement closed. When the deal fell through, the broker refused to refund the escrow money. Eventually the broker confessed to the client that the money was spent and no longer in the broker’s account. Gross & Romanick, P.C. is now seeking a judgment against the broker through a lawsuit in the Virginia Court system. Gross & Romanick, P.C. learned that the broker was not licensed to transact business in Virginia as an escrow agent or otherwise. Although the client will likely prevail in Court and will obtain a judgment against the broker, he has been deprived of his escrow money for a significant period of time and there is always the risk that the judgment will be un-collectable.
The facts of this case illustrate how important it is that when negotiating for the purchase or sale of a business you have legal counsel review any documents related to the sale, and that due diligence is conducted to investigate any parties receiving commissions under the sale to ensure that they are legitimate business entities. Failure to do so can lead to detrimental results if the sale/purchase does not consummate.
Since 1980 Edward Gross of Gross & Romanick, P.C. has been negotiating and settling the sales/purchases of businesses. The experienced business law attorneys at Gross & Romanick, P.C. are more than willing to assist you and your business with any matter relating to the sale or purchase of a business.
