Hello again,

An interesting question and one that probably every business broker in the world can relate to!

We are in a recession and as such it is certainly more difficult for any party to complete a transaction but it is made especially hard when the lawyers forget about the commercial aspect of a transaction and get caught up in their little closeted worlds.

There are always two sides to any transaction, there will always be risks for both parties, there are always timelines associated with every transaction and the only way to keep this on track is communication. Why then in many cases doesn’t this apply to lawyers? The best lawyers I have dealt with in my years as a broker are those who are willing to be part of the process not sit in their offices working to their own timelines and thereby frustrating the deal. If you interact with the parties you gain a better understanding of the deal and the parties associated with it.

When the lawyer for the Seller won’t talk to the broker who is also working for the seller you know as a broker you have a problem. You market the business, work through the process with all the buyers who respond, get those who wish to proceed to paper, work through the commercial side of the Due Diligence with the successful purchaser and now all you need to do to complete the deal is write up what has been agreed by the parties. Sounds easy but all Lawyers are not created equal. Why can a due diligence process take 2 weeks and the resulting final paperwork still not be completed after 3 further weeks? Billable hours maybe? A Jesus complex? Or is it just as simple as the fact that these companies are there to make money for their partners after all, and will promise the world up front and then allocate the work to an overworked underling and you will get your advice when they are ready no matter the deadline. What are you going to do, sue them?

Please don’t get me wrong not all lawyers are like this. I have recently had a couple of great conversations with Lawyers who are equally frustrated with their own fraternity. One in particular who has decided to downsize his company to a size where there are just two partners, like Paul and I here at Switch, who are comfortable with the quality of each other’s work and have no issues with multiple personalities of a larger team.

Any business broker worth his/her salt realises that both the buyer and the seller in any transaction need to have legal advice to protect their interests in any transaction. That is a no-brainer but the keyword is advice, and the good ones realise that to get a deal done their client is going to have to make some concessions and take some risk. Their job is to minimize that risk but there is no way to eliminate it entirely if a deal is to be completed, advice needs to be given, ramifications need to be explained and the client needs to then decide if it is a risk worth taking. If business was risk free everyone would be doing it.

There are always timelines in any transaction and Lawyers have to start adhering to them. If their workload means a deadline can’t be met then don’t accept the work in the first place. We have recently had an instance where a lawyer who was allocated the job in a large firm to write up a S&P for the purchaser of a business we have been marketing get seconded to a larger transaction and no-one was told. The purchaser, her client, just stopped getting calls for a few days. The worm can often turn in any transaction and often does when timelines don’t get met and the purchaser begins to develop buyer’s remorse. And for the seller, when the buyer walks away from a perfectly good deal, the process has to start again. But the lawyers still get paid.

So please understand I am not bagging all lawyers, just the same way as I say that my own conduct is not perfect on every deal, but if we are all trying to see if we can get a deal together then join the team rather than sit in isolation on the sidelines.

If you don’t have experience in commercial transactions say so and either get advice yourself or pass the transaction onto someone at your firm that does have the necessary experience to move the transaction forward. The transaction is not about you or the accepted processes you as lawyers like to adhere too. So get with the program and join the process, gain an understanding of the transaction, of the people involved and then advise accordingly