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Attorneys are Deal Killers
By Quiet Light
Selling a web-based business can be a complex process. There are many moving parts in play, and one part moving against a deal being made can break that whole system down. When that happens, you may not be able to tell where you went wrong. Surprisingly, if you have an attorney on your team, the fault could be theirs.
Working in acquisitions generally means trusting people on your team with skills you do not have. Your attorney is a perfect example – they have training and knowledge to protect your interests and avoid potential liabilities. They’re a tremendous asset to structuring your deal but what if they’re part of the problem? How can you tell if your attorney has become a “deal killer”?
I am not advocating that you forgo the use of an attorney. Good attorneys will make a deal move faster and protect everyone involved. Buyers and sellers however should remember that their attorney is not the director of the deal, but one cog in a complex process.
Since brokering online sales and acquisitions is my business, I thought it was time share a few problematic behaviors you should look out for.
They Start Over With A New Purchase Agreement
If your attorney wants to write a purchase agreement from the ground up, there is a good chance they may just looking for billable hours. This is unnecessary; starting with a boilerplate and modifying it will be reasonable for nearly all transactions. Reputable law firms nearly always have a library of commonly used agreements that have been well researched and proven that they can use as boilerplates in order to save their clients billable hours. Not only does starting with a boilerplate assure legal language is consistent in context, but it can also save you and your team unnecessary time and confusion.
They Make One-Sided Agreements
Whether you’re proposing a deal or reviewing one, it’s important to consider participants interests on either side of the fence. You pay your attorney to look out for liabilities. However, some attorneys just don’t understand that one of your interests is to get a deal done, and so some edits that come back from attorneys are so one sided and biased toward their client’s gain that the agreement will never result in a deal. Always review your attorney’s edits and ask whether it sufficiently addresses the interests of both the buyer and the seller to avoid stagnating your deal.
They Ask For Unreasonable Assurances
Assurances can of course be important. Expecting the other party to stand by their representations is quite expected and normal. Asking them to guarantee performance is another beast. Some attorneys work so hard to protect their clients that they blind themselves, and handcuff them to unreasonable expectations – preventing them from ever getting a deal done.
They Are Totally Unfamiliar With The Space
Has your attorney ever worked in the online space? Have they ever facilitated the documents for the sale of a business? Their lack of knowledge can kill your deal. Not understanding what to look for in an online acquisition can result in a lot of needless paperwork and processes leading to deal bloat, delays, and oftentimes a dead deal. If you can’t find an attorney with relevant experience, you can always talk to your attorney about industry expectations.
They Work Too Slow
Timelines are crucial for keeping the goodwill between either party in your deal. Some attorneys take far too long to return and review documents. Hold ups like this can cause rifts between either side, and they can ultimately delay the entire process of closing the deal. Maintaining a timeline for your entire team for each step of the process can help you avoid messy situations down the line.
Bottom line: Remember that your attorney works for you. Smart buyers and sellers communicate frequently with their teams, and by understanding and avoiding these possible “deal breakers” there’s a chance you can save yourself and everyone involved some time, money, and aggravation.
Your attorney is an important advisor, but you are the director of the deal. You do not need to accept 100% of their recommendations, and you should always ask for their reasoning. If you think a recommendation will ruin a deal, ask your attorney if there is an alternative.