We had a signed letter of intent in April and were set to close the transaction in June – until the seller’s lawyer got in the way. What should have taken 60 days ballooned into a full six months. Luckily, it still closed.
In this particular transaction, the client insisted on working with his real estate attorney. The lawyer had handled a few smaller Main Street transactions before, but nothing of this size or complexity.
To complicate matters, our client was a type-A engineer who wanted to take a deep dive into the legal issues and understand them on his own terms. That process certainly would have been smoother if he’d had an attorney who understood the transaction issues himself.
Instead of drawing on experience to educate the client and make recommendations, the attorney simply laid out the challenges and asked the client to provide direction. He brought more fear than clarity to the process.
Unfortunately, the attorney was a one-man firm. That meant when he took a vacation or had to spend a week in court, all work stopped. There was no one else in his office who could keep the process moving forward. This attorney was learning on the job. And the client got charged an extra-large “tuition” bill in the process.
Why a Faster M&A Process is Better
We were fortunate to be working with a patient buyer who stayed with the deal to the end. This buyer did not offer the highest price (it was the second highest), but it was clear from the outset that they’d be the most lenient and tolerant of the seller’s need for total analysis and control. Having that right fit can be the difference between a deal that gets to close and one that falls apart.
The other saving grace is that the seller had an extremely stable business. The employees were well-tenured, and most revenue was under contract.
What’s more typical, though, when negotiations drag on, is that something negative or positive happens (e.g., a key employee leaves, big contract loss/gain) and either party tries to renegotiate the deal. Emotions run high, and it gets increasingly likely someone will throw up their hands and walk away. That adds up to a lot of lost time, money, and momentum on either side of the equation. Once the seller accepts an offer, it’s in everyone’s best interest to keep the deal moving forward – and that means you need specialized legal support who knows how to get that done.
Related Article: How Delays When Selling Your Business Can Lead to Deal Failure
