What The Experience Shows
In our combined twenty years of experience doing deals, we have worked with many attorneys. They are all different, some really great, and we have learned a few things along the way that are helpful for buyers and sellers to be aware of. First and foremost, It is critical to buyer and seller when selecting an attorney, to work with those familiar with mergers and acquisitions. Transaction attorneys have experience with buying and selling businesses and know what to look for to protect their client while keeping the deal moving forward. We recommend that attorneys review offers to be sure that what buyer and seller think the offer stipulates is represented clearly. Second, we recommend that you get your broker involved so they can develop a relationship with your attorney from the beginning to keep a continued open line of communication between them.
Communication is key
Once the broker has both buyer and seller attorney information, the broker should be communicating with the attorneys to provide their contact info, explain their role as a facilitator to the transaction, and support the attorneys for a successful close. Brokers will ask for regular communication from the attorneys, especially if issues start to arise.
Something attorneys appreciate is a spreadsheet listing all parties to the transaction by name, company, phone and email. This would include attorneys, brokers, accountants, lenders, landlords, etc. Some brokers will send a deal summary and agreements such as NDAs and listing contracts, so the attorney is familiar with the entirety of the transaction.
Too often, a business broker will develop an adversarial position with their client's attorney, caused by the broker's unwillingness to stay involved with the transaction from contract to close. Some brokers are not willing or able to work as a team. Some attorneys will question the professionalism of brokers who come to close without the attorney having ever heard or seen from them through the entire process. Attorneys need to be able to discuss issues with the broker and put their heads together to resolve any issues before they get out of hand.
Keep Attorneys In The Loop
As the deal progresses, a good broker will ensure the attorney is updated and copied on significant developments along the way, especially if the developments are deal contingencies. This includes:
- Buyer "signing off" on due diligence
- Buyer receiving a lender commitment letter
- Approval by franchisor for a new/assignment of franchise agreement
- Landlord approval of requested lease assignment
Set Realistic Timeframe For Closing
The process should not be rushed. According to some attorneys, a common mistake by intermediaries is setting unrealistic time frames for completion of activities or closing, given the work that needs to be performed and the number of parties to the transaction. Brokers can help attorneys by resolving business issues between buyer and seller, and by facilitating communications and providing the broker's perspective based on their experience in transactions.
Communication with the attorney may increase as the deal get closer to close. The role of the broker as facilitator is to support the closing process and work on collecting documents needed. Generally this includes:
- Prorations for the closing statement
- Updated list of furniture, fixtures, equipment
- Final lease agreement and amount of security deposit the Landlord is holding
- Final inventory adjustment if applicable
- Payoffs seller is obligated to make at time of closing including vehicle loans, equipment loans, etc.
- Calculation of payroll prorations and possible employee vacation/bonus credits
Brokers should always ask for a draft of the closing statement in advance of the closing and review it carefully. We have seen it all, from incorrect sale price, misspelling of names, wrong dates and omission of the Seller's note on the closing statement. Brokers are watching for these errors and advising the attorney if they find any.
Work As A team
In summary, we see our role in working with your attorney as a true facilitator for getting the deal done. We don't get in their way, rather make ourselves available as a member of your closing team to reduce the stress of selling your business and get to the closing table without hiccups.