For M&A Success, Make Sure Lawyers Stay in Their Lane
Partners, repeat after us: Attorneys are not advisers.
- By Reed Warren
- May 24, 2017
In your merger and acquisition (M&A) plans, your attorney can help spur your M&A strategy to success, or they can sink it.
To be quite candid, it's typically one of these two experiences.
In a world where approximately 85 percent of all M&A deals don't meet the expectations of those involved, it's vital that every party is working off the same playbook and heading in the same direction.
Knowing all this, you especially need your attorney to be working for you, not against you.
How Attorneys Work in Your M&A
Lawyers should be in the business of simply crafting the legal documents so your deal is made, not broken.
To avoid a lot of unnecessary pain in your M&A initiatives, you need to be working with the right attorney that helps your IT services business accomplish this.
What we've found is quite different in real life, however. It's been our experience that attorneys try to give business advice that's ultimately self-centered. It's self-serving because they're more concerned with not losing a client that they bill on an annual basis than with offering advice that's focused on doing the right thing for the IT services firm.
Your attorney, one that works well with an M&A adviser, should be helping you craft the legalities so you can effectively sell your firm or buy another while avoiding surprises that could potentially derail the entire transaction.
Often we see lawyers try to become counselors and business advisers, which they're not. Your attorney is simply here to help you either buy or sell, legally. They're not in business to advise you on items related to the business terms of the deal, taxes or post-acquisition tasks.
You've heard us say it before, and I feel it's worth mentioning again: The biggest reason M&A projects fail is because of a lack of a post-sale integration process. Part of this problem is derived from having people involved in your M&A that are trying to work outside their skilled roles.
For example, when you have an accountant trying to advise you on hiring and firing as a part of your post-acquisition tasks, you're probably not getting the best advice. Conversely, when you have someone advising you on your accounting whose expertise is in the post-integration tasks of all your new employees, it's more than likely not wisdom that's valuable.
Yin and Yang
The yin is understanding how attorneys work in your specific case.
The yang is knowing what's expected of your attorney as they work toward getting you the best outcome for your M&A situation, whether you're on the buy side or sell side. A successful M&A demands a team, not just a lawyer.
Your attorney should have experience in your specific situation with your vertical and should be able to easily walk you through the process.
The worst possible situation for you would be working with an attorney that doesn't know anything about the IT channel, the IT industry or how valuations work for IP-based businesses.
You need to work with an attorney, as part of an overall team, that has experience, know-how and a list of IT firms that have been successful by meeting most everyone's expectations.
In 2017, consider a strong M&A team that includes your attorney, M&A adviser and accountant. Just like it takes a village to raise a child, it takes an M&A team to get your deal done with success.
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Reed Warren is vice president of Revenue Rocket, an IT services growth consultancy and M&A adviser. You can reach him at [email protected].