Not just any attorney will do
The verdict is in. You absolutely, positively need legal help when selling your business.
You not only must hire attorneys, but you also must hire the right attorneys–ethical ones with experience in transactional legal representation.
Although you have probably already worked with general-practice attorneys in the everyday operations of your $5 million business, they might not have the skillset necessary to help oversee the sale of your business. Selling your business is likely to be the largest transaction you will ever make; it’s important to make sure it’s done right.
While you may not be able to afford an M&A attorney that specializes in writing contracts for big corporate mergers and acquisitions, at least choose a transactional attorney that specializes in business dealings. Transactional lawyers are experienced in drafting complex agreements, memos, and presentations to a company’s board of directors. They also understand the language of private equity investment firms and regulations governing business transactions.
These six questions can guide you when selecting the right legal firm to support you during the sale of your business.
1. Has the attorney worked with sophisticated buyers and sellers?
Giving your business to your current attorney’s firm is fine, as long as their team has experience dealing with mergers and acquisitions (M&A) in your industry.
You don’t want to take a lawyer out of their element. If they are uncertain of the process, they’ll question everything. Or, they may not understand typical provisions in your industry. As a result, they may overlook key details or spend far too many billable hours on your project. Working with a lawyer who isn’t experienced in mergers and acquisitions could cause your prospective buyer to get frustrated and walk away from the deal.
Remember, much is riding on this transaction. Your loyalty should be to your business, your employees, and your family, not your lawyer.
2. How many transactions have they completed?
Look for a firm that has done a lot of M&A transactions and has sophisticated clients. The only way to gain legal experience in this field is by doing multiple types and sizes of mergers and acquisitions.
3. How well do they explain the process to you?
This moves beyond the legal stuff to business advisory matters. You want a lawyer who will take the time to walk you through the process and explain how things work beyond the legalese.
For example, an experienced transactional attorney might notice that your financials aren’t exactly in order, and may recommend some corrective action. This can save you from some big headaches later in the process.
4. How much do they know about your industry?
Not only should your legal team understand the entire selling process, but they should also understand your industry. They can provide more specific and applicable advice when they have a solid understanding of how your business works, the assets that are required, and technology-driven innovations in business models.
5. Will they give you tough love?
You don’t want your attorney to be your buddy. You want your legal team to be there for support, guidance, and candor when needed. If they feel you’re making a bad move, they won’t hesitate to call you on it. You want a firm’s recommendations, not just “options.” Naturally, this is a delicate dance, but some attorneys understand “tough love” better than others.
6. Will they allow you to focus on your business?
This is probably the most important benefit of finding a qualified legal team. As you prepare to sell your business, it’s essential to show that your business is profitable. Find an attorney that can handle the legal matters so that you can continue to focus on growing your business. Let your legal team tend to the heavy lifting with regard to transactional compliance issues and regulatory requirements while keeping you in the loop.
If your current legal team can’t provide satisfactory answers to these six questions, then you’ve got some serious thinking to do. The performance of your legal team will be critical to all parties involved in the deal. This is not an area where you should settle for anything less than the best.
It’s not necessarily a matter of finding the biggest legal firm in the area – it’s about finding the legal firm best experienced in transactions. Case closed.
Still have questions about finding the best legal team? Call me and let’s talk. (561) 543-2323