Short answer: Yes. It matters. Many owners choose to use their personal attorneys when they decide to sell their business. Especially in smaller towns, some attorneys claim expertise in almost every aspect of practicing law. They’ll help you with estate planning, reviewing contracts, and defending a workers’ comp case. They may even have been your divorce attorney.
But attorneys tend to use the tools they’re comfortable using, and after a while, they become hard-wired in a specific mode. They may be so cautious that they try to take all the risk out of a transaction before they’ll allow you to sign off on it (impossible to do). They may have spent their whole career fighting to win litigation, and it’s hard to get them out of combat mode.
Here’s what will help you choose the right attorney for your deal:
Your attorney plays a support role. You’re in charge of decisions. When sellers or buyers get stuck on “winning” a specific point or concession, brokers usually assume they have their attorney in their ear, advising them on how to win the deal. I’ve said it many times. In my mind, the best deals are win/win; no one has to “lose” in the transaction. In fact, I’m not really comfortable working with buyers or sellers who are set on winning or making the other party feel like a loser. That mindset makes everything harder. Both parties should walk away from the sale feeling like they got a fair deal. If your attorney is starting to make you feel less sure about what you want or what to think, it’s a sign they’ve taken on the wrong role.
Selling a business should be a marriage, not a divorce. Both parties to the deal should be committed to getting the deal done, and their team, from attorneys to accountants to lenders, should all be committed to getting the deal done right and closing as quickly as possible. Your attorney is there to make sure you understand all the terms of the deal and understand the possible risks associated with them. They can advise you, but they should be as committed as you are to closing the deal. In my experience, there are very few truly bad actors looking to buy HVAC companies.
Most buyers and sellers are honest and determined to do the right thing for their company and the people involved. If your attorney starts telling you the other guy is trying to rip you off, it’s a sign they can’t change their default mode from litigation to merger. Helpful hint: if their company website includes the word “fight” anywhere in the copy, chances are you’ll need a different attorney for your transaction.
Attorneys get paid by the hour to argue even the smallest and least important points of a contract. I recently had a deal that almost fell through because the buyer’s attorney wanted to make one clause of the non-compete agreement permanent. The rest of the agreement held the owner to five years, but if the owner discussed pricing with anyone, at any time, for the rest of his life, the non-compete said he could be sued for the full sale price. It was not only wrong-headed, but also unenforceable.
I called the buyer directly to ask why this unreasonable clause had been a point of contention between the two attorneys for weeks. He said, “I don’t know – it’s not important to me, and we couldn’t enforce it anyway. I’ll tell him to get rid of it.” Meanwhile, billable hours racked up as the two attorneys tried to win a point. Remember that every red line, every debate over a comma or a thousand-dollar expense from three years ago can eat up weeks of time, putting the deal at risk and costing the buyer and seller money.
If you want an attorney who specializes in M&A, ask your broker for a referral. Experienced brokers will have relationships with attorneys, lenders, and other professionals who understand the industry’s business model and can move quickly and efficiently to get a deal done. A specialized attorney, like a specialized doctor, may cost a bit more per hour, but will almost certainly save you money and frustration in the long run, since their interests will be aligned with yours: a fair deal that closes as quickly as possible.
If I can help you get the most value from the sale of your business, let’s start with a free valuation.
