You’ve listed your business for sale. Received several offers. Picked the best buyer and you execute your LOI to make it official. Diligence went smoothly (well, as smoothly as diligence can go)! Now it’s time for legal docs. The buyer sends a purchase agreement to your attorney – your neighbor’s friend who gave you their ‘friends and family rate’. Your attorney’s first draft of edits comes across and even with no law experience you can tell you’re in trouble.
Rule #1: Don’t let your divorce/real estate/family law attorney handle your M&A transaction. Not even if they are a friend of a friend offering a great discount. (Especially if they are a friend of a friend offering a great discount!)
It doesn’t mean they aren’t a good attorney, it just means they aren’t a good attorney for your business transaction. You wouldn’t let a dentist perform your brain surgery. Likewise, you don’t want an attorney who isn’t an expert in business transfers handle your transaction.
It’s important to choose the right attorney early in the process. This doesn’t mean that you necessarily hire the most expensive attorney, but you choose a well-versed transaction attorney who understands the ins and outs of M&A law and can provide appropriate guidance. An attorney who deals with caps, baskets, indemnifications and change-in-control provisions all day, every day. An attorney who knows what is market for business transactions and can help you navigate the most important areas to focus your attention on.
In any transaction, there will be risk for both the buyer and seller. No party walks away with 100% certainty. A great attorney helps you identify the biggest areas of risk and pushes your risk to areas that have a lower probability of occurring.
Don’t make the mistake of trying to save a dollar on transaction costs by setting yourself up for significant and costly post-closing claims because you weren’t well protected. When you are likely transacting the largest payout of your life, it's important to protect the assets you receive in your sale. Choose a solid attorney who knows M&A.