Previously, in DN 221, we mentioned that when you are preparing to sell, the real question is not whether to upgrade your financial statements from a Review to an Audit; it is whether your CPA firm has substantial M&A experience. A reader wrote back with a point worth a note of its own: the same is true of your lawyer.
Many owners of middle-market A&D companies have worked with the same attorney for decades. So, when a sale appears on the horizon, the instinct to have them help with the transaction is understandable. Here’s the problem: selling your company is not simply a larger version of the legal work your general counsel has done for you over the years. A generalist encountering intricacies unique in M&A for the first time will learn during the transaction, at your expense and at your risk. Thus, it’s important to hire counsel who is an expert in M&A law.
We have watched this play out for 25 years:
1. Counsel without M&A experience: Every issue is treated as novel. Drafts crawl back and forth, the buyer’s seasoned counsel sets the terms, and either the timeline drags until the deal loses energy, or value quietly erodes in the fine print.
2. Counsel with M&A experience: They know which points are market and which are worth fighting for. Negotiations move quickly, momentum is preserved, and the deal closes at or very near the LOI price.
None of this means showing your trusted attorney the door. When you sell, keep your family lawyer close, but make sure the person sitting across from the buyer’s counsel has negotiated many deals just like yours. Loyalty is valuable, but in the most important transaction of your life, experience is priceless.
Have a great day everyone,
Max McFarland
Associate
