If you’re a business owner or CEO looking to find a lawyer for your M&A deal, it can be daunting. After all, there’s no guarantee that the attorney will perform the best work and help you get the results you need. That’s where thorough research comes in: taking the time to vet lawyers, compare services and fees, and make sure they are competent enough to handle this type of transaction.
With a little effort on your part, you’ll soon learn how to identify an M&A lawyer who meets all of your needs. Read on for more advice about what qualities should match with yours when choosing legal representation!
Putting Together Your M&A Team: M&A Attorneys
Your lawyer will be an important member of your deal team. Instead of acting as an impartial middleman, your lawyer and his or her staff will work directly for you (or your organization). Every lawyer owes their clients fiduciary duty, so your lawyer will look out for your best interests.
M&A lawyers are often known as deal lawyers or transactional lawyers. While it is possible to employ a general attorney to manage your transaction, doing so is not advised, especially for situations involving larger sums of money. Each transaction is distinct and has its own intricacies, but larger transactions typically have more moving pieces and need a more seasoned attorney to handle the intricate tax and legal matters. You should be more motivated to locate an M&A attorney the greater your expected sale price is.
Non-disclosure agreements (NDAs or confidentiality agreements), buy and sale agreements, seller-financing notes, and assistance with due diligence are just a few of the services that M&A lawyers offer. Due diligence refers to the procedure a buyer goes through to “kick the tires” and decide whether they want to purchase the business from a legal, financial, and commercial standpoint. Legal matters are typically handled by attorneys if there are licensing and regulatory concerns. The company’s accountants occasionally handle tax matters, but employment and legal matters are often handled by the attorneys.
The sale process is often led by brokers or bankers up until the point of choosing a buyer, but after that decision is made, lawyers take the reins. The switch was made because, after a buyer was chosen, the emphasis shifted to putting the deal on writing. The agreements that will govern the sale are negotiated between the parties. These papers are legal papers. Depending on their approach and familiarity with the legal documents, the bankers or brokers may continue to play a key role, but from this point forward, the lawyers will normally be in charge.
You should anticipate paying an M&A lawyer anywhere from a few thousand dollars to $50,000 or more, depending on your preferences, financial situation, and level of risk tolerance. Legal costs are expected to go well into the six figures for transactions in the lower middle market ($50 million and above). If you allocate only a few thousand dollars, your attorney will probably spend the time analyzing a purchase agreement created by the opposing party and informing you of the key issues. The majority of my clients desire slightly more guidance than that. Budgets between $15,000 and $20,000 are very acceptable for deals between $2 million and $10 million.
Choosing an M&A Lawyer
You should hire the services of a lawyer who has firsthand knowledge of what works and doesn’t during the merger or acquisition process. They should also be conversant with the official M&A structure and be aware of the common points when negotiations between opposing parties fall apart. Another essential quality in a lawyer is the ability to separate generally accepted industrial standards from the comparatively unusual requests of the client.
Deal lawyers with experience are skilled negotiators who are also realistic. They won’t permit a minor problem to balloon into a major one. M&A transactions take place swiftly, and each one has its own specifics and problems. When problems arise, good lawyers know better than to raise a lot of fuss about trivial issues.
The fact that a lawyer has a ton of expertise and experience with mergers and acquisitions, particularly those involving engineering firms or engineering corporations, is by far the most crucial factor in picking a lawyer. Different sectors have unique M&A intricacies that can only be avoided or addressed by a corporate attorney with competence in those fields. It is a significant benefit if your lawyer has broad business knowledge from their previous employment.
Your lawyer doesn’t necessary need to have knowledge of your particular sector. My mentor once inquired about his experience in the sector when discussing a potential customer who was selling a chain of donut shops. There are no doughnut shop attorneys, as my mentor reminded the seller, which is accurate. The importance of your M&A lawyer having extensive experience and expertise of mergers and acquisitions in general over specific market experience is negligible. Only heavily regulated industries, such those in the energy and utility sectors, are an exception to this rule. There, a lawyer with experience in your particular market and a few deals may be of use to you. If not, experience in M&A should take precedence over experience in particular industries.
Select a lawyer who you like and who will operate in the manner you prefer in addition to having a lot of M&A knowledge. Find a lawyer who has your back because this is your deal and your deal team. Focus on choosing a lawyer you like because you will work closely with them throughout the M&A process. There are many lawyers to pick from. It is always advised that you meet with the attorney numerous times and converse with them in a more relaxed setting, such as over a few beers. Pose questions to the attorney. Find out how they conduct business. Your lawyer should share your perspective on how business is conducted and the kinds of issues that are important.
Each attorney will approach the deal differently because there is no one way to manage an M&A transaction. It depends on the time, industry, budget, style, and level of risk-taking, as I have indicated. But not all attorneys feel the same way. Some people think that some things should always be done in a certain way. Some attorneys are content to stand by and watch you handle the deal, calling them in just when needed. Others don’t like that strategy and insist on being the point person for everything because they are offended, annoyed, or concerned.
There is no right or wrong way to handle this situation; rather, good lawyers should adjust to the demands and preferences of the client. There are several ways to handle an M&A deal, and it’s crucial that you pick a lawyer who will collaborate with you in your preferred manner. A great attorney can go over the main factors and strategies with you.
Consider using a law company or group of attorneys rather than a single practitioner for deals in the middle to upper range of the lower middle market ($25 million to $50 million). This is not always important, and there is no set point at which a single practitioner stops being useful. However, larger agreements move a little more swiftly and undoubtedly have more moving pieces. Larger businesses typically employ more people, which results in greater challenges with human resources. The significance of tax considerations increases.
The parties typically anticipate and justify spending more time on legal fees when the operations are larger since there are more challenges and factors to take into account. While a concern about classifying people as independent contractors when they are actually employees may not be a major problem if only a few individuals are involved, it is likely to get much more attention if many more workers are involved.
One of the most crucial choices in a deal is selecting an M&A lawyer. When choosing an M&A lawyer to provide advice tailored to your position and agreement, keep these suggestions in mind if you are going through a merger.
The Bottom Line
It is essential to find a lawyer who has experience and knowledge in M&A transactions and to vet lawyers to ensure they can handle the deal. As well as what the M&A lawyers offer, the expected compensation, and the importance of selecting an M&A lawyer that the business owner or CEO likes and can work with closely.
At Eminae, we understand the importance of having a skilled and experienced legal team by your side. Our team of experts is equipped to provide tailored advice to ensure that you are fully supported throughout the entire process. Contact us today to learn more about how we can assist you with your M&A needs.