The Importance of an M&A Lawyer

Now that you are contemplating a sale, we will discuss the importance of a key team member—your M&A lawyer. Some sellers decide not to use an M&A advisor and ask who they need for a transaction. Here is our advice.

In today’s blog post, let’s discuss why an M&A Lawyer is important.

We sometimes get asked who the most important person on the M&A team is. Although we would love to say the M&A Advisor (us), the truth is that a deal requires a good lawyer. Clients will often try to use their corporate attorney since they have a prior relationship, but this is often a very costly mistake - we’ve seen it happen! Here is why a strong M&A attorney, especially with experience in the seller’s industry, is so important:

1. Structuring the Deal: M&A transactions come in various structures (e.g., asset sales, stock purchases, mergers). An experienced M&A lawyer can recommend the best structure for your specific goals, tax considerations, and liability concerns.

2. Drafting and Negotiating Contracts: M&A contracts are complex, with numerous clauses addressing everything from purchase price adjustments to indemnification. An M&A lawyer understands these standard provisions and can draft and negotiate terms to protect your interests. Without one, you risk unfavorable terms or excessive redlines over routine language.

3. Due Diligence: A big part of any M&A transaction is reviewing financials, contracts, intellectual property, liabilities, and more. An M&A lawyer helps ensure that no red flags are overlooked, minimizing the risk of surprises post-closing.

4. Managing Regulatory and Compliance Issues: Certain deals require regulatory approval (like antitrust clearances), and compliance issues vary by industry. An M&A lawyer is familiar with these requirements and can help ensure a smooth, compliant transaction.

5. Industry-Specific Insight: Knowledge of your industry’s unique issues is essential, especially for things like licensing, contract assignments, and compensation structures. A lawyer familiar with your sector will know what’s customary, providing stronger representation and helping you get the terms you need.

6. Minimizing Risk: M&A deals involve significant financial stakes and risks. A seasoned lawyer anticipates potential issues and implements protections—such as well-drafted representations, warranties, and indemnities—that safeguard you long after the deal closes.

Time is money, and an unqualified lawyer can cost a seller time and money. We’ve seen deals die because a lawyer created unnecessary roadblocks and complications. We have also spent many hours on calls with Lawyers who are new to the industry, explaining terminology, industry standards, and billing practices just to be sure the lawyer understands the transaction. This was all on the seller’s time.

We have worked with some outstanding M&A lawyers in multiple industries that we are happy to introduce. They make our jobs run much smoother, so we are big fans!