Lawyer vs Farm Sales Lawyer | Queensland country life
Buyers are increasingly arming themselves with teams of lawyers to beat farmers on the price of their properties and it pays farmers, often quite generously, to be prepared, says DLA Piper senior partner Andrew Fisken.
This is especially the case when corporations, private equity or international buyers are considering a deal and, Fisken said, these lawyers were looking for cracks in the armor of any agricultural company in the market.
In most cases, these buyers started by offering indicative prices before doing all their due diligence.
“One of the reasons they do their due diligence is basically to get you to lower the price they put up front,” Fisken said.
“You want to make sure they know where the skeletons are at the start of the play so they can’t later say, ‘Oh, we offered you $100 million, but we found XYZ issues and now it’s only 40. ‘.
“You don’t want to be in this situation because you might have let other good potential buyers go.”
The issues raised by legal teams representing buyers can be incredibly varied, from share certificates to planning permission.
Mr Fisken said the best form of defense was to allow enough time for experts to inspect the business and its assets before the property was marketed.
“I think people should be prepared for up to a year and a half between when they make the decision and when the money is in their bank account,” he said.
“Every company has its needles, even the big multinationals don’t fully comply with all the laws all the time.
“By bringing in people to do things for you, you’ll find things you can sort out pretty quickly and easily to make your business more attractive.”
Problems that were harder to solve were even better revealed early.
“You’ll have a plan to show how you deal with it so you can have an intelligent discussion with them rather than having a lawyer throwing you something you never thought of,” Fisken said.
Although there was no legal requirement to disclose potential issues, he said most standard contracts require vendors to commit to compliance.
“If there is a problem and you sign a contract stating that you have obtained all the necessary permits, it is likely that you will be sued and you could have part or all of the purchase price taken back. you received, which is not a great situation because then you end up with no money and no farm or agribusiness,” Fisken said.
Compared to most Australian, British or Asian contracts, the North American standard agreements were particularly strict, he said.
“North American style deals are much friendlier to buyers, they’ll expect you to make promises and structure a deal in such a way that you’ll feel pretty uncomfortable dealing with someone. ‘one from Australia or someone from another country,’ says Mr Fisken.
“North American deals often have contracts that are almost unreadable to Australians.”
It was, he said, very common for North American buyers to demand compensation for any breach, no matter how small.
“Basically, every time they take a $1 loss because you breached your contract, they want that dollar back from you,” Fisken said.
“The other thing that’s pretty common with North American agreements is that you’ll have these 10 or 20 pages of promises, but then they’ll want you to go through each one with a fine-tooth comb and say, in the clause x, we promise that we have all the necessary permits, but you should know that we do not have permits for the back pen or kennel shed.”
To help mitigate the risk of loss, Fisken said many customers choose to purchase specialist warranty and indemnity insurance.
Managing legal costs in such complex negotiations could also be made somewhat easier, he said, by the increasingly common practice of offering lawyers a monthly retainer that only covers the costs plus a commission. of success based on a certain selling price being reached.
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