Working with Lawyers to Get Your Deal Closed
Randy J. Bring, RA., CBI, CM&AP
In my 20 years as a Business Broker, I have dealt with probably a few hundred attorneys. While they are all different, some great, some certainly less than great, I have learned a few things along the way about working with them. Importantly, I have learned how to create a professional alliance with the lawyer(s) involved in a transaction to ensure I create an open line of communication. This allows me to keep the transaction relatively stress free and ultimately gets me to the finish line.
When I ask for my Buyer or Seller's attorney information the first thing I do is communicate with their attorney. I send an email introducing myself and my firm with my contact information. In just a sentence, I explain my role in the transaction and I how I am there to support the process and their work by being an involved facilitator. I make clear that I would appreciate regular communication from her especially if she sees an issue developing that might delay or prevent the deal from closing. A trick I use is to attach a simple form spread sheet which lists all the parties in the deal by name, company, telephone contact and email. This includes the lawyers, brokers, accountants, lenders, landlord, etc. I know this favor is appreciated by every lawyer who receives it as a printout of the same will often appear on the inside of their client folder (I have seen mine many times). I know some brokers who will also send a deal "teaser" summarizing the transaction and, for larger deals, might also see fit to attach the CIM for the attorney to get caught up with the entirety of the transaction at the start of the process.
Too often, a business broker will develop an adversarial position with their client's attorney and many times this is caused by the Broker's unwillingness to stay involved in the transaction from contract to closing. I recently spoke with Deborah Carman, a transactional attorney in Boca Raton, FL. She told me she occasionally deals with Broker's who are "not willing or able to work as a team" and that she questions the professionalism of brokers that "come to the closing whom I have not seen nor heard from them through the entire process". She added, "I need to be able to discuss any issues with the brokers so that we may put our heads together and resolve any issues before they mushroom".
As the deal progresses, I make sure the lawyer is updated and copied in on significant developments along the way especially if these developments are deal contingencies. This includes:
â–º Buyer "signing off" on due diligence
â–º Buyer receiving a lender commitment letter
â–º Approval by franchisor for a new/assignment of franchise agreement
â–º Landlord approval of requested lease assignment
It is important not to rush the process. Matt Katz, an M & A attorney in Ft. Lauderdale, FL was recently asked what he sees as a common mistake made by the broker-intermediary. He responded, "Setting unrealistic time frames for completion of activities or closing given the work the be performed and the numerous parties involved in the transaction". When I questioned Matt how an intermediary can best work with him he responded, "First, resolving business issues with the client and the purchaser. Second, facilitating communications with the client on issues and risks and providing the broker's perspective based on the broker's experience in transactions".
Knowing communication with the lawyers is essential to a smooth transaction, I am also sensitive of their professional time and am careful to make contact only when I have something significant to share with regard to the deal. Attorneys that are billing their client by the hour may bill their client for time spent discussing the transaction with you. I consider part of my role to do whatever I can to minimize those charges.
As my transaction gets closer to closing, I maintain even stronger communication with the attorney(s) working my deal. I create a checklist of items needed to close and share the same with them. My role as a facilitator is to support the closing process and work to collect documents I know will be needed to get the deal done. This generally includes my providing:
â–º Buyer/Seller prorations that will appear on the closing statement (and a calculation of the same)
â–º Clean final list of the included furniture, fixtures, and equipment
â–º Final lease assignment and a note on the amount of security deposit being held by the Landlord
â–º Final inventory count (if applicable) and adjustment for any difference of the same
â–º Any payoffs the Seller is obligated to make at the time of closing including vehicle loans, equipment loans, etc.
â–º Calculation of payroll prorations and possible employee vacation/bonus credits
My job is to collect this information from the Seller and the Buyer who can then agree on the particular proration of a given item. As the broker I am not certifying any of these numbers rather, I am overseeing their work, organizing the same and then providing it to the closing attorney for her final review, approval, and inclusion on the closing statement.
Attorneys are human, they make mistakes. I ask for a draft of the closing statement in advance of the closing and review the same carefully. I have seen it all, from the wrong sales price, misspelling of party's names, wrong dates and the omission of the Seller's note on the closing statement. Watch for these errors and (nicely) advise the attorney of the same. Believe me, they will appreciate your effort.
In summary, I see my role in working with attorney's in a transaction as a true facilitator. I don't get in the way of the lawyers in the deal rather, I make myself available to them as a fellow professional whose involvement can make their job easier and less stressful which, at the end, allows me to get to the closing table and get paid.
Randy J. Bring, P.A., CBI, CM&AP I Transworld Business Advisors