How M&A lawyers add value to our clients deals? That’s our job and primary goal.
Identify, quantify, reduce and mitigate the risks. Design and offer practical, workable solutions that would be accepted by both/all parties. Be quick about it.
Every moment in a sale or acquisition process matters. But, always, in the process, some moments are of critical importance and matter the most. There will be decisive points that can determine the outcome of the entire process: make or break, deal or no deal. Principals, sellers or buyers, may want the full control and responsibility in these moments. Oftentimes, they may decide to delegate that responsibility to their advisers – and this is when we are prepared to step in and act in their best interest.
To illustrate, see some examples of critical moments:
In a partial acquisition scenario, where the buyer acquires either a majority or minority interest, and the seller retains the rest, the parties need to negotiate the terms of their deal with patience, mutual respect, empathy and looking to their common future. In the heat of the bargaining it is often better to have your advisers speak for you and make your points.
Where a deferred payment of the purchase price has been agreed (i.e. earn outs, subsequent payments depending on milestones, etc.), the parties should be aware that such payment/s cannot possibly be set in stone, exhaustively, in the signed transaction documents. The viability of such arrangements will depend on multiple factors including, without limitations,
- precision of the agreed metrics, definitions and formulas,
- feasibility of business plans and budgets,
- validity of the underlying assumptions and projections,
- availability and cost of funding/capital,
- good standing and solvency of major customers,
- retaining key customers and suppliers, and key employees,
- each party’s motivation going forward, and so on,
External factors are also in play:
- increased competition,
- new market entrants,
- demand for and introduction of new/superior, similar or substitute products,
- industry and economy cycle (note what currently happens in a high inflation, higher interest and delinquency rates, lower liquidity, stagnation or recessionary environment),
- force majeure events, etc.
Standing on years of training, practice and experience, corporate lawyers can advise and act in these circumstances. That’s what clients should expect and ask for.
By Pavel Hristov and Dragomir Stefanov, Partners, Hristov & Partners