Selling a business is a highly complex undertaking that can require months of attention, and often years of planning. The lawyer you select to help sell your company plays a role in everything from writing the purchase agreement to explaining how various deal terms might affect the sum with which you walk away. Along with your business broker, your lawyer helps form the core deal-side team. This isn't a function you should necessarily assign to your in-house counsel. A good M&A lawyer brings valuable expertise and an unbiased perspective to the team. Here are five strategies for choosing the right person.
Don’t Go In-House
You hired your in-house or contract counsel because you like and trust them, so it makes sense that you’d go to them first. Don’t make this mistake. A good M&A attorney needs a certain amount of distance from your company to give you quality advice. Moreover, a generalist might be highly adept at supporting daily operations, but they will lack the specific expertise you need to manage M&A. This puts you at a distinct disadvantage when it comes to negotiating deal terms and understanding industry norms. Your deal partner can and will exploit this knowledge gap.
Ask the Right Questions
Hiring a lawyer is just like hiring any other member of the team. You need to interview them and trust your gut. Some questions to ask include:
· What is your prior experience with deals like mine?
· What are some common issues deals similar to mine face?
· What percentage of your practice is devoted to M&A?
· Will I be working with a partner, or with a junior associate?
· What specific support do you provide to the deal?
· Can you assist with negotiations?
· Are you prepared to navigate regulatory compliance and tax issues? What issues are most common in my industry?
Get a Recommendation
A referral from someone who knows the industry is highly valuable. Ask your M&A advisor or investment banker whom they’ve worked with before. If you have colleagues who have recently sold a business similar to your own, inquire about their experience with legal counsel. Once you’ve chosen your attorney, ask other how they feel about this person. A lawyer who excels at transactions will have a strong reputation, while one who flounders may have quickly gained the contempt of industry insiders.
Get Clear About Pricing
Lawyers can be expensive, but a good one is worth it. Ask for clear details about pricing structure, including whose time you will be paying for—a partner, an associate, or an intern. Ask about the estimated time to complete common tasks, and the estimated budget for the project. If you have a set budget in mind, you can ask your prospective lawyer to alert you if you’re about to go over budget, and discuss whether this budget is reasonable.
Choose Industry Insiders
While an M&A specialist is a step in the right direction, you’ll get the most value for your investment if you pay for a lawyer who has specific expertise in your industry niche. The best lawyers know the key players in your industry. They also understand industry norms, which allows them to set reasonable expectations, assist you at the negotiation table, and anticipate how the other party may respond to proposed deal terms.
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