The Role of a Lawyer in an Accounting Practice Sale
In an accounting practice sale, your lawyer can be a “Deal Maker” or a “Deal Breaker”, which one do you have?
Ok…maybe it’s not quite that black and white. After all, if you are hiring a lawyer to help you with a transaction, you have some say-so in what role you want them to play. It’s your responsibility to define that role and then to hold your lawyer accountable to your pre-determined parameters.
In our experience, here is where a lawyer can be very helpful:
- High level advisor
They review your documents and consult with you about your risk areas. They make recommendations for areas that may need some additional clarity in the agreement, or may need to be added altogether. One thing to remember though, many lawyers work with a very vast array of different industries. He or she may have seen a problem area in one industry that just doesn’t apply to an accounting practice sale. In other words, they may not be as familiar as you are with your industry and the particular business at hand. You must take their advice and combine it with your own knowledge and common sense.
- Arrange the closing
This is quite straight-forward. They can handle the closings, trust accounts, transfer of shares, wiring of money, etc.
Roles to Avoid:
- Controlling the negotiations
Remember-this is your deal. If you are not careful, a lawyer can severely over-insert himself or herself into a deal. This can be really frustrating if you are not careful. Unless they’ve agreed to some fixed-price agreement for this role, there is an incentive for the lawyer to run-up billable hours. This can be in direct conflict with getting the deal to actually close.
- Controlling the main documents
An administrative assistant can edit a document. The lawyer doesn’t have to do this. This small tactic can help you keep control of your deal.
Lawyers without boundaries can put any transaction at risk
In short, if you leave all the details to your lawyer…you may discover complexity that you never knew existed. We’ve seen lawyers create 40 + page purchase agreements on relatively straight-forward accounting practice sales. We’ve also witnessed lawyers arguing with lawyers about details that neither side has any care about. This causes delays and what we call “deal fatigue” that can put even the best of deals at risk. That is unnecessary and unacceptable. It also prevents the parties from focusing on the things that really impact their results –like transition and integration planning. It’s important to “keep your eye on the ball!”
The pace of pursuing a deal is critically important. If you go too slowly, things can just stall out…or perhaps a good opportunity could be missed. If you go too quickly, mistakes can be made. The role of your lawyer can have a huge impact on the pace and success of your negotiations. For more about speed, please check out our column on deal velocity.