Selling your company can be a significant move, but there’s a common snag – attorneys. In small business deals (transactions under $250 million), sellers typically hire their attorney when the buyer seeks legal counsel.
This traditional approach comes with a hitch: When an attorney is engaged for contractual representation, their first task is to figure out who represents the other party. Once this alignment is in place, they primarily converse with each other, following legal best practices. What does this mean? Business owners and representatives take a back seat, relying on legal counsel to decipher and filter all aspects of the deal, even if they’ve already come to an agreement.
As an experienced CPA and financial advising firm, we have been involved in numerous deals where this traditional structure was in place. Unfortunately, it often led to extensive time and financial investments, resulting in an excellent business transaction collapsing.
Conversely, when we were contracted to advise these companies after these setbacks, we adopted a fresh approach. Let’s break down the process:
Engaging a Dedicated Attorney: First, a dedicated attorney is brought into the picture. This attorney is engaged by us to oversee the creation of a well-balanced and precisely written business transaction. Their primary focus is on the specific business details that need to be addressed, and they infuse the necessary legal expertise into the document.
Intermediary Facilitator: As the intermediary, we represent the transaction. This role involves ensuring fairness and efficiency throughout the transaction process. Recognizing various attributes that are not straightforward, we further clarify the significance of legal prose and whether it’s substantive to the transaction.
Final Review by Independent Attorneys: Upon reaching the contract completion stage, the parties present a meticulously drafted document to their independent attorneys for a final check before the dotted line is signed. This step adds an extra layer of assurance and legal diligence to the process, enhancing the overall quality of the purchase and sale agreement.
As the Intermediary Facilitator, we are responsible for juggling numerous provisions, always focusing on achieving the best outcome for both parties, with the paramount focus remaining on the business side of things. This role is substantial, requiring exceptional communication skills and the finesse to navigate complex transactions. But, as they say, quality comes at a cost. Surprisingly, most of the time, this cost is significantly lower than what would be incurred with separate independent representation. And the trade-off? Reduced risk of transaction failure.
Are you ready to enhance the successful purchase and sale of your company by streamlining your business transactions? Let’s talk!
CPA, Managing Partner
Chasse & Co.