If you're thinking about selling a business without a lawyer, especially here in Virginia, you're not alone. Many small business owners handle their own business sales, often with a handshake agreement, a simple contract, or something pulled from the internet.

On the surface, it can feel like a good way to save money. But the most serious problems in business sales usually don't show up at closing—they appear months (or even years) later, when something in the deal wasn't clearly addressed.

Let's talk through some of the most common mistakes business owners make when they try to sell a business without legal guidance, and how you can avoid them if you're planning to buy or sell a business, whether in Virginia or anywhere else.

Sell a Business

Buy a Business

Why Selling a Small Business Is More Complicated Than It Looks

Selling a small business isn't just about agreeing on a price and signing a simple contract. A business sale is a bundle of decisions that affect:

• What exactly is being sold. Are you buying the equity of a business or just the assets? 

• Who is responsible for existing debts and liabilities?

• How is the purchase price is structured and taxed?

• What happens if something goes wrong after closing? 

When these issues aren't clearly spelled out, the business might change hands, but the risk and confusion remain. This is one of the main reasons buyers and sellers later wish they had spoken with a lawyer before closing.

Mergers & Acquisitions

Mistake #1: Not Clearly Defining What Is Being Sold

One of the biggest mistakes in selling a business without a lawyer is failing to clearly define what the buyer is actually purchasing.

Are you selling:

• The assets of the business (equipment, inventory, customer lists, goodwill)?

• Or the ownership of the entity itself (LLC interests or corporate stock)?

This distinction matters because:

• In an asset sale, buyers often avoid many of the company's prior liabilities.

• In an ownership sale, buyers usually step into the company's shoes—liabilities and all.

• There can also be significant tax differences between these two types of transactions. 

If the parties don't spell this out, disputes can arise over:

• Who owns accounts receivable or customer deposits.

• Whether certain equipment or vehicles were included.

• Who owns the business name and website.

• Who controls phone numbers, social media accounts, or intellectual property.

These are exactly the kinds of questions that the purchase agreement should answer up front.

Mistake #2: Relying on Generic Business Purchase Agreement Templates

Many owners looking to sell a business without a lawyer start with a Google search for “business purchase agreement template” or they ask an AI tool to generate a document for them. I've also seen people rely on documents generated by real estate brokers. While templates can look convenient, they're usually too generic for a real-world transaction. 

Common problems with template agreements include:

• Missing or weak representations and warranties.

• No meaningful indemnification provisions.

• No mention of how inventory or working capital is handled.

• Lack of non-compete or non-solicitation protections.

• No clear process for resolving disputes.

In other words, templates don't reflect:

• The structure of your specific deal.

• Virginia law (or the specific law of your jurisdiction).

• The actual risks in your business.

When I get involved after-the-fact it can sometimes be too late. Even if it's not too late to try and solve the problem, it's usually more expensive than it would have been to get help up front. 

Mistake #3: Vague or Risky Payment Terms (Seller Financing and Earnouts)

Not every buyer can pay the full purchase price in cash at closing. Many small business transactions use:

• Seller financing with payments made over time.

• Earnouts tied to future performance.

• Deferred payments based on revenue or profit.

These tools can work very well if the details are clear.

Common mistakes include:

• No written payment schedule.

• No interest rate or default provisions.

• No collateral or security for the seller.

• Vague earnout formulas (“percentage of profit”) without defining profit.

When you're selling a business without a lawyer, it's easy to assume everyone “understands” what was meant. Months later, when numbers are calculated differently or business circumstances change, the lack of detail becomes a serious problem.

Mistake #4: Ignoring the Tax Consequences of the Business Sale

Taxes often have a bigger impact on the net outcome of a deal than people realize, but they're frequently an afterthought in DIY business sales.

Common tax-related issues include:

• No negotiated allocation of the purchase price across different assets.

• Not understanding capital gains vs. ordinary income treatment.

• Overlooking state and local tax implications.

• Ignoring potential sales or use tax on asset transfers.

How the purchase price is allocated between goodwill, equipment, and other assets can affect:

• The seller's tax bill in the year of the sale.

• The buyer's ability to depreciate or deduct the purchase over time.

A Virginia business attorney working with your tax advisor can help structure the sale to avoid unpleasant surprises for both sides.

Alden's Profile

Mistake #5: Skipping or Minimizing Due Diligence

When the buyer is a friend, employee, or family member, both parties may feel that due diligence isn't necessary. But trust doesn't replace documentation.

Basic due diligence for a small business sale typically includes reviewing:

• Financial statements and tax returns for several years.

• Outstanding debts and obligations.

• Key customer and vendor contracts.

• Lease agreements.

• Employee pay, benefits, and any disputes.

• Any threatened or pending lawsuits.

On the seller's side, not preparing for due diligence can delay the closing or cause the deal to collapse entirely. On the buyer's side, skipping due diligence can mean stepping into liabilities that weren't fully understood.

Mistake #6: Failing to Address Liabilities Clearly

Liabilities are one of the most misunderstood pieces of selling a business without a lawyer.

These might include:

• Unpaid taxes or filings.

• Vendor balances.

• Customer refunds or warranties.

• Lease obligations.

• Employee claims.

• Pending or potential lawsuits.

Without clear contract language, both sides may assume something different about who is responsible. Phrases like “buyer takes the business as-is” are vague and often unhelpful.

A well-drafted agreement should spell out:

• Which liabilities the buyer is assuming.

• Which liabilities remain with the seller.

• How the parties will handle unknown or future claims.

Mistake #7: No Transition Plan After Closing

In many small business sales, everyone focuses on the closing date—but not on what happens in the weeks and months after closing.

Without a transition plan, buyers can face:

• Confusion about day-to-day operations.

• Loss of key customers who weren't informed or reassured.

• Disruption in vendor relationships.

• Unexpected drops in revenue.

A simple written transition plan can cover:

• How long the seller will stay involved and in what capacity.

• What training and support the seller will provide.

• How and when customers and vendors will be notified.

If you're selling a business in Virginia, this transition often matters as much as the legal paperwork. If you're buying a business, you have to be prepared for what happens after closing. 

Mistake #8: Mishandling Employees in the Sale

Employees are often the backbone of a small business, but in DIY transactions they're frequently treated as an afterthought.

Common mistakes include:

• Not clarifying whether employees will be retained by the buyer.

• Failing to address accrued vacation or unpaid wages.

• Ignoring existing employment agreements or restrictive covenants.

• Poor communication that leads to key employees leaving.

In asset sales, employees generally need to be rehired by the buyer, which raises issues about pay, benefits, and seniority. Handling this poorly can create both HR and legal problems.

Mistake #9: No Non-Compete or Weak Restrictive Covenants

From the buyer's perspective, it rarely makes sense to purchase a business and then allow the seller to immediately open a competing business down the street—or online.

Yet in many “sell my business” deals handled without a lawyer, there is:

• No non-compete agreement at all, or

• A non-compete that is so broad it may not be enforceable.

A practical, enforceable non-compete under Virginia law is typically:

• Limited in geographic scope.

• Reasonable in duration.

• Tailored to the type of business being sold.

It should also be combined with:

• Non-solicitation of customers.

• Non-solicitation of employees.

• Protection of confidential information and trade secrets.

These are standard tools in well-drafted purchase agreements, but often missing from DIY contracts.

Mistake #10: Overlooking Lease and Contract Assignment Issues

Many small businesses rely on:

• Commercial leases for office, retail, or industrial space.

• Vendor contracts for supplies and services.

• Customer agreements or service contracts.

These agreements often restrict assignment or transfer without consent. If you're selling a business without a lawyer, it's easy to assume the buyer simply “takes over” these contracts, but that's not always true.

You may need:

• Landlord consent to assign or sublet the lease.

• Vendor approval to transfer agreements.

• Customer consent where contracts are personal or non-assignable.

Failing to address this can put the buyer in a difficult position, even after closing.

Mistake #11: Casual or Incomplete Closing Process

In many informal transactions, “closing” is little more than a check and a handshake. But a business sale closing should be handled like a formal event, even for small businesses.

A proper closing typically includes:

• Signed purchase agreement and ancillary documents.

• Bill of sale and assignments for specific assets.

• Corporate approvals or member consents (for LLCs or corporations).

• Payment documentation and confirmation.

• Closing checklist to ensure all steps are completed.

Without a structured closing process, important items can be missed. Those misses may come back to haunt you later. 

Mistake #12: No Plan for Disputes or Claims

Even with the best intentions, deals can run into problems. When business owners sell a business without a lawyer, their agreements often say very little about what happens if something goes wrong.

Key tools that are often missing include:

• Indemnification provisions (who pays if there's a claim).

• Limits on liability (caps, baskets, survival periods).

• Dispute resolution provisions (mediation, arbitration, venue).

These terms don't just help in litigation—they often help encourage earlier, more practical resolution of issues before they escalate.

Mistake #13: Waiting Too Long to Involve a Business Attorney

One of the most common patterns I see is business owners coming to a lawyer only after something has gone wrong. The payments stopped, customers left, liabilities surfaced, or a dispute has erupted.

By that point, options are limited and usually more expensive.

In contrast, involving an attorney early in the process can:

• Help you think through structure (asset vs. ownership sale).

• Identify risks before you're committed.

• Draft or review the purchase agreement to protect your interests.

• Coordinate with your CPA on tax and financial implications.

You don't have to spend a lot of money in order to get the help you need. Even limited-scope review (for example, a flat-fee contract review) can catch major issues in deals that would otherwise be handled completely on a DIY basis.

Contact Eldredge Law Group, PLLC for a consultation

How Eldredge Law Group Helps Small Business Owners Buy and Sell Businesses

At Eldredge Law Group, we focus on helping small business owners, entrepreneurs, and closely held companies navigate business sales and purchases in a practical, straightforward way.

We regularly assist clients with:

• Structuring asset and ownership (stock/LLC interest) sales.

• Drafting and negotiating business purchase agreements.

• Seller financing and earnout arrangements.

• Due diligence planning and review.

• Coordination with tax advisors on deal structure.

• Transition planning and post-closing support from a legal perspective.

Our goal is simple: help you avoid the kinds of mistakes that turn a business sale from a major milestone into a major headache.

Business Sales and Purchases

Thinking About Selling a Business Without a Lawyer in Virginia?

If you're considering selling a business without a lawyer, or you're already in the middle of a deal and want a professional review of your documents, it may be worth a brief conversation.

A short consultation can often:

• Confirm whether your current structure makes sense.

• Highlight blind spots or risk areas.

• Give you a clear picture of what's missing from your agreement.

You don't have to turn your transaction into a complicated, drawn-out process. But a little planning and tailored legal advice can make the difference between a clean exit and a lingering problem.

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