For anyone who is interested in becoming involved with an M&A transaction—whether as the buyer or the seller—it is important to assemble a team of advisors that will assist in the process. These individuals will be able to help conduct the more technical aspects of the M&A deal with their specialized knowledge. The advisory team should consist of an M&A intermediary, an accountant, and a lawyer. These advisors can provide a balance of knowledge from a business brokerage standpoint, a financial standpoint, and a legal standpoint, all of which are necessary to the completion of a successful deal.
What many people do not understand is that not just any lawyer can lead them through the M&A process. The attorney will write the legal contracts, including the final purchase agreement, which will include a lot of stipulations that will need to be done correctly in order for the business transaction to be beneficial to both parties. The following list of qualities to look for in an attorney will help the reader find the person most appropriate for leading them through to the close.
1. Ask for a Recommendation
M&A advisors have been in the business for many years, and therefore will know some great lawyers and accountants that they can personally recommend. Ask for some references on who to choose, and if the advisor is reliable, they should be able to direct one towards the top attorneys in the business.
The common saying “you get what you pay for” is highly applicable in this situation. Opting for a cheaper attorney despite your M&A advisor’s recommendations may help cut costs up front, but the resulting purchase agreement may be less than beneficial.
If local lawyers tend to be more costly simply due to their location, then there is nothing wrong with working with a lawyer remotely. Certain areas of the country boast lower hourly rates, so if slashing costs is a necessity, then it may be beneficial to find a quality lawyer from other part of the country, rather than choosing a less experienced attorney to do the job.
Request an estimate from the prospective attorney, and then ask which situations could cause the fees to go above the given estimate. It is important not to be stuck paying legal fees that one cannot afford, and the more complex the deal, the more expensive the price tag.
While it may be true that any lawyer that has passed the Bar exam could assist the buyer or seller in the M&A process, that does not mean that it is a good idea. One would hire an experienced M&A advisor, so the same should be considered for the attorney. It is vital to select someone who has direct experience working on an M&A transaction.
However, despite this, many people may look to a lawyer that they are already familiar with, such as their real estate lawyer or a relative. While the real estate industry is similar, having experience in buying and selling homes is not comparable to M&A experience.
It is also important that the lawyer have familiarity with the type of business being sold. If he or she has only worked with selling small businesses, but the transaction in question is a multi-million merger, then their skills will not be as valuable. When interviewing the attorney, request information on the type and number of transactions with which they have been involved.
4. Check Out the Firm
Not only is it vital to hire an experienced attorney, but it is also important to check up on the law firm that they are involved with as well. The attorney may need to utilize colleagues as a resource when various issues arise. Not only do they have to have knowledge of business mergers and acquisitions, but real estate and tax laws are also vital elements to an M&A contract. The attorney will only be as strong as his or her resources.
This may seem like a category not worth mentioning compared to the magnitude of the other points. However, a great deal of time will be spent with the attorney that is hired to work on this deal, therefore it might be a good idea to actually enjoy their company (or at least not despise it). It is recommended that when hiring anyone on the M&A advisory team that they be at least likable, so that one is not stuck being around someone that they dislike for a majority of their time while the deal is in session. M&A deals can last for many months, so hire individuals with whom you can agree and trust.
Following instincts as well as one’s business sense is vital in M&A. If something could be seen as a red flag, then it is probably in one’s best interest to continue looking for another attorney. The right attorney will help facilitate a successful M&A deal, and that can be priceless.
Your M&A advisor should be the first place to look when it comes time to add a lawyer to your team of experts when buying or selling a business. An intermediary will be able to recommend an individual with which they have personal experience and trust.
George & Company would love to be your personal M&A advisor, whether you are looking to buy or sell a business. We would be happy to help you find the best and most affordable lawyer to add to your advisory team. Contact us in complete confidence today to learn more.