The Lawyer You Need Is Probably Not the Lawyer You Have

Somebody who has closed company sales, recently, and more than a handful of them.

That is the whole specification, and notice what is not in it. The question is not whether your attorney is good. The attorney who handled your house closing, your will, and your partnership agreement may be excellent at all three. None of that is this.

The failure mode is not bad advice. It is pace.

This is the part owners do not see coming, because they are watching for mistakes.

Illustrative. An owner sold a medical-billing company and used the attorney who had handled her building purchase and her divorce. A good lawyer, and entirely out of their depth. Each round of comments to the buyer’s counsel took five to seven weeks. Points settled in the letter of intent came back reopened. The legal negotiation ran ten months, produced no executed agreement, and ended when the buyer stopped returning calls.

She had paid for the buyer’s investigation twice over by then, in time, and she was back in the market with a company that had been off it for fourteen months.

Nothing in that story is malpractice. Every delay was an attorney being careful about something, in a document type they had not worked in enough to know which parts were already settled. Deals at this stage die of elapsed time far more often than of disagreement.

Why speed is a term of the deal

Everyone is tired by the time the agreement is being drafted. The owner has been answering questions for months while running the company. The buyer’s team has started looking at something else in the gaps. Each exchange takes a day longer than the last, and nothing has been refused; it has just stopped moving.

Counsel who has done this before knows which positions are worth a week and which are the standard first-draft defaults that get traded away in an afternoon. That judgment is almost entirely a function of volume, and it is what you are buying.

What to actually ask before you hire

Four questions, and the answers arrive fast or they arrive as adjectives.

How many company sales have you closed in the last three years? What size, and in what industries? Who else on your team would touch this, and what have they closed? When was the last purchase agreement you negotiated on the seller’s side?

An attorney who does this work answers all four in a minute. An attorney who does not will tell you about their transactional experience generally, which is a different answer to a different question.

Where the attorney’s work actually is

Most of the drafting and negotiation of the agreement is theirs. So is the legal opinion, the mechanics of the representations and warranties, the consents, and whatever has to be true in the documents before anybody can close.

What is not theirs is the commercial argument. When diligence turns something up and the buyer wants a number off the price, whether to pay that in price, in a holdback, in an indemnity, or not at all is a commercial decision with a legal expression. Attorneys who treat it as a purely legal question escalate it, and an escalated commercial question turns into a position that somebody then has to retreat from.

One captain

Your advisor runs the negotiation. That is the job, and the alternative is three professionals each solving for their own part of the problem while the buyer watches them disagree.

Be alert to a professional on your own side who wants to run it. Expertise with a strong personality attached, pointed at the wrong part of the deal, produces a negotiation with two captains, and the cost of that lands on you rather than on either of them.

And the buyer’s advisor is not also yours. Separate representation on each side is not a formality. A single party trying to broker both ends of a company sale has an interest that is not yours, and no amount of good faith changes the math of who is paying them for what.

The accountant question is the same question

Deal structure changes what you keep, and some of what determines that is fixed by how the company is organized, years before a buyer exists. Several of those decisions carry waiting periods measured in years.

So ask the structure question at the start of planning rather than at the letter of intent, and ask somebody who does transactions rather than somebody who only does your returns. Those are different specialties, and the difference shows up in this exact situation: an owner who raises it during negotiation finds out that the useful answers were available three years earlier and are not available now.

What getting it wrong costs

Not a bad clause. A dead deal, and the particular kind of dead deal that is expensive to recover from.

A sale that fails late means you spent the exclusivity period, the other credible buyers moved on while you spent it, and your diligence findings are now known to a buyer, their advisors, and their lenders. The next process starts from there, with a company whose last deal failed.

The loyalty owners feel to long-standing counsel is real and it is reasonable. It is also the single most common way an owner staffs their own side of the table at a disadvantage and does not find out until month nine.

More on this: The One Question That Tells You Whether to Hire Them.

---

This is what we do. Prism Edge assembles the side of the table you are on: counsel who has closed sales of companies like yours, an accountant who works on transactions rather than only on returns, and one party running the negotiation so the attorneys are arguing about documents and not about commercial terms. We also keep the exchange moving, which is the part of the work that looks like administration and is the reason some deals close.

The full chapter on the negotiation, the team, and the one hire that reliably kills deals is in The Business Sale, free to download here.