Once again, you have worked for months to get a deal done.  The Buyer and Seller are excited, a LOI has been drafted and it is time for the legal work to start.   Once again, the theme of the transaction turns from excitement to adversarial.  Once again, after many hours of hard work and negotiation, you get the deal closed in spite of the attorneys involved.  Has this scenario ever happened to you?

Attorneys sometimes approach deals like court; you ask for and get as much as you possibly can on every issue.  This approach works well in a court case, but fails miserably in an acquisition. Attorneys are generally used to scrapping.  They like to fight.  They operate in a world where you fight and claw your way in the battle and get every advantage you possibly can, giving up nothing without a fight because winning is about gaining every possible advantage over your adversary that you possibly can through the process.  Unfortunately, the wrong attorney will use this approach to an M&A deal and it fails miserably.  As an M&A professional, you need to know how to effectively use attorneys in the process.  This article will help you as you maneuver the sometimes treacherous waters of using attorneys to draft the closing documents.


Tackle small issues first, then move on to large issues. Give generously on small issues in the beginning then you can hold back with important issues later. This strategy works for getting the important things you want and showing the buyer you are willing to work with him.

People want to work with people who are workable. Do not take “hard lines” on anything at first, but wait to hear from the other party about their thoughts before making demands.  Using your M&A advisor during this phase is helpful.

Ask: What is my risk? If I accept the proposed changes, what is the downside? What do I give up?  What is the likelihood this event will happen?  Am I willing to accept this risk?  What dollars would it cost?

Ask: How important is this issue? There may be a time when you are willing to accept the risk and leave the documents alone.


Make sure attorneys know:

  • Share your approach and strategy for the transaction. The approach and strategy is much different in a business sale than other transactions because the relationship of the Buyer and Seller will have post-closing.
  • Buyer and Seller have to work together post closing – need to be fair and meet in the middle sometimes. If they carry battle wounds from the negotiations, they are less likely to get along post-close.
  • Inform everyone that no one ever gets 100% of what they want. Both sides need to acquiesce in order to get the deal done and negotiate a favorable outcome for both sides.
  • Itemize a list of your concerns and the concerns identified by the attorney both before you start and during the drafting of the documents. Once you have a list, prioritize each item on a scale of 1-10. As you negotiate the deal knowing beforehand which items are important and less important helps you get favorable results.
  • What we need to know from the attorney is:
  1. How important are the issues identified by the attorney in the paperwork as problematic?
  2. What is downside for the Seller for each of these issues?
  3. What do the documents lack? What needs to be changed/corrected?
  • We’ve worked hard to get to this point and we need you to do everything you can to NOT KILL the deal.
  • Make sure they know of timelines and they agree to meet them, even if it requires after-hours work.
  • The documents do not favor one party over the other as a general rule. The documents are designed to protect parties and outline duties, warrants, and responsibilities of each party.

Remember, attorneys are experts in law and not business. Use them for what they do best.  If they start giving business advice, beware of that advice.  It may not be that good. A wise man once said: “don’t take financial advice from someone who makes less money than you do”.


About Rick Krebs, CPA - Business Valuations, Mergers & Acquisitions

Rick Krebs - Mergers and Acquisitions Professional, Business Broker, CPA. Rick brings a unique blend of sales, entrepreneurial, and financial experience to Business Sales Group. He began his career as a CPA, working in Nevada and Utah where valuable financial experience was gained. He uses those skills every day. He graduated with a Master’s of Science Degree and Bachelor’s Degree from Utah State University. As a business owner he started Liberty Mortgage, a mortgage bank licensed in 23 states nationwide. He eventually sold the successful company to an investor from California. He has been in the M&A space helping people sell their businesses since July, 2010. During his first year as a business broker with BRC, he listed and sold more businesses than the entire office combined. As a sale-side and buy-side advisor for Mergers and Acquisitions transactions Rick's advisory, accounting, and management skills are invaluable when advising sellers as they maneuver the intricate details of the deal through closing. Rick is also a CNA (Certified Negotiation Expert) which helps him negotiate the most favorable terms for clients in a transaction. ​ Rick was quoted by FORBES as an expert sales-side advisor who helps Sellers avoid the pitfalls of selling a business.

Posted on January 6, 2015, in Company News and Announcements and tagged , , . Bookmark the permalink. Leave a comment.

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