M&A Attorney
Hiring
Worksheet
WHAT AM I HIRING SOMEONE FOR? WHAT ROLES WILL THEY PLAY?
An M&A Attorney can support you as a seller in five functions:
Navigating due diligence
Analyzing and responding to Letters of Intent
Drafting documents: Purchase Agreement, Governing Agreement, Employment Agreements, Executive Compensation Plans, IP Assignment, Leases, Bills of Sale, etc.
Negotiating: Prioritization and ability to negotiate to a reasonable alternative
Completing all of the administrative tasks and action items that must be done before close
How Do I Find an M&A Attorney?
An M&A lawyer is experienced in what is required in a business transaction. A transactional lawyer will be experienced in different types of business transactions that will ultimately result in the purchase and sale of a business and its assets, no matter how that deal may be structured.
The rule of thumb: When you opt to go for a smaller, more boutique shop, there’s an increased risk that you’re not going to have the same level of expertise in the many areas of a business (there’s a reason that there are environmental lawyers, tax lawyers, etc…). There’s a benefit in everyone to going to a more full-service firm, even if you think your business is simple and straightforward.
But even with full-service firms, there’s a broad spectrum from which to choose. One consideration is where you’ll sit in a firm’s stack of clients. For most middle market or lower middle market transactions, prioritizing the big companies doesn’t make sense. There are highly competent and experienced M&A lawyers at many regional mid-sized law firms.
Look in your geographic region. Search for M&A attorneys in nearby mid-size cities.
Check your network. Who do you know who has sold a business? Who did they use? And do they recommend them?
Analyze their expertise – and be wary of an everything and the kitchen sink list of specialties.
Ask how they staff transactions. How many people will they put on the deal? Will it include paralegals? A bunch of associates? Multiple partners? The difference between having resources available and staffing particular resources is important for pricing and communication.
How will communications occur? Who is the single point of contact?
How many other deals are they working on? You don’t want to be the only client they’re working with, but you also don’t want to be sixth or seventh down the stack.
How do they deal with broken deals? (See broken deal fees under Financial Commitment.)
Here’s a checklist to help you determine: What am I hiring someone for? What roles will they play?
APPROACH
Diligence
Documents
Negotiations
Administrative Work
Communication
EXPERIENCE
Closed Transactions By Type
Most Relevant Situations
Reasons for Last 3 Failed Deals
FEE STRUCTURE
Fee Model
Commitment Term
Estimated Fee/Minimum Fee
What is paid if there is no transaction?
ANGLE
Approach to Our Situation
Value Guidance
Definition of Success
PERSONALITY CHECK
Ethics
Shared View on Success
Understanding the Financial Commitment
The cliche of “you get what you pay for” isn’t always true – but it’s more true than not when it comes to legal services.
But, that doesn’t mean there should be an open checkbook. You’re entrusting an M&A attorney with getting some of the hardest, most complex parts of a deal over the finish line.
Fee models:
Billable hours: Most attorneys will work on this model. If you have met with someone and you trust them and they have experience doing this and they have other clients, it’s not in their interest to drag things out.
What can you expect? (Note that this can increase based on the factors under total cost expectations.)
In a mid-sized firm in a regional market, a partner-level attorney will have a rate of $400-$600/hour.
In a larger firm in a tier-1 or tier-2 market, a partner-level attorney will have a rate of $700-$900+/hour
Flat fee: Less common.
Broken deal fees:
Let’s say you’re a week from close and things fall apart on the deal. What happens? There are a million different ways to deal with this:
“The fee is the fee.” – You’re expected to pay your bill.
Discounted model – You are expected to pay a portion of your bill.
Application on a future transaction – You can defer payment until a future transaction takes place.
Success fees – You may not pay a broken deal fee, but you’ll pay an extra amount when a deal closes. It’s unusual, but we still see it.
Total cost expectations:
For a transaction at the $50 million and under part of the market, it’s reasonable to expect that you will land at $100,000-$150,000 in legal fees. What factors materially affect that number?
How complicated the deal structure is to achieve a certain outcome
Additional agreements and documentation for something like a rollover agreement
The level of regulation in your industry
The extent to which you need governmental or third party consents
Whether you’re negotiating debt documents in the deal
Lender involvement
A heavy real estate component
No matter what, get in the rhythm of checking in on costs with your attorney every few weeks, asking:
What costs have I incurred to date?
What’s still outstanding that hasn’t yet been billed?
What’s your current expectation for how much is left?