Insights

Selling Your Business? “Help Me Help You.”

By Steven Keeler

In the 1996 film Jerry Maguire, Tom Cruise’s sports agent character pleads with his NFL football player client Rod Tidwell (played by Cuba Gooding, Jr.) to “Help me help you.”  Tidwell is initially surprised and even amused, but he soon understands what Jerry is asking of him.  It is an iconic plea for collaboration and mutual effort in negotiating the best deal for a client.

We lawyers can relate.  Here’s my top 10 list of the ways in which a business owner can help his or her lawyer (or investment banker, broker, accountant or any advisor, for that matter) prepare for, negotiate and close the sale of their business more effectively, efficiently and with optimal outcomes.  There are good and bad advisors, so do your due diligence on them.  But also know that being a “good client” and effective owner and teammate can dramatically impact the value and cost of your advisors through what will be a challenging and dynamic life event.

1.) Size Me Up. Business owners are referred to lawyers and other advisors for their experience and based on client testimonials, but the client and lawyer should carefully consider their “fit”.   This is as much about personal chemistry and styles as your particular needs or the lawyer’s capabilities.  Professionals come in all shapes, sizes and pricing.  Your advisor should be as comfortable as you about your fit, and the best advisors are honest enough to refer you to another advisor if they don’t think they are the best choice for your transaction.  The decision to engage should be mutual and based on open and honest discussions around mutual expectations and fit.  Like all relationships, it’s two-sided, and ideally will be a true partnership

2.) Be Straight (and Honest) with Me. Many company founders and CEOs have good reason to “keep their cards close to the vest”.  But if you want an M&A or other professional advisor to perform effectively and efficiently, it’s best to “tell all”.  If you can’t trust a lawyer with sensitive information that the lawyer is ethically bound to keep hush hush, who can you trust, and how will incomplete information help your lawyer perform and add value to your deal?  Hiding the ball from your quarterback and late-breaking surprises or changes in course only limit a lawyer’s ability to get the best results and ultimately may create closing issues, inefficiencies and higher transaction costs.  Also, be honest about your perspective on fees, your likes and dislikes, and the bandwidth and capabilities of your internal team and other outside advisors.  This will be valuable in mapping out a multi-month process and assigning tasks.

3.) Listen (and Respond) to Me. Clients are a collection of people – owners, management and employees.  Some of them are good listeners and others are better readers.  Certain matters will be best addressed with phone or video conferences, while many will be dealt with through email. The better and more organized a client is at timely responding to requests for information and decisions, the more effective, cost-effective and value-add the lawyer will be.  Professional fees often exceed even the advisors’ estimates not due to their efforts and performance but the client’s failure to do their part and timely engage their entire team in the process.

Take (or At Least Consider) My Advice. After all, the client is paying for sound and experience-based advice and counsel.  Of course, you are the client and the boss.  There will be situations where you have to make choices based on your lawyer’s advice, and there may even be occasions where you will choose not to follow a lawyer’s advice. That’s as it should be, as it’s your business and your transaction.  But if a pattern of not taking or pushing back on your lawyer’s advice develops, the process will become more complicated, mutual trust may be impaired, and it may even indicate you made the wrong choice of lawyer.  Lawyers should always present options based on both legal and sound business advice.  But in the best lawyer-client relationships, the client commits to trust the lawyer’s advice in areas where the lawyer’s deal experience is credible.  A good lawyer doesn’t want to feel like he or she needs to protect themself from their client.  They want to be their client’s trusted advisor

.Don’t Get Ahead of Me. We’ve heard it said that “deals that don’t get done quickly don’t get done.”  There’s some truth in that.  But a client can hurt themselves and frustrate a sale process if they do important things relevant to the transaction before or without telling their lawyer.  Client foot faults arising from actions taken without informing their advisors can be embarrassing and even reduce the buyer’s trust in the process.

‍Let Me Do My Job. The client should own and oversee the transaction with the lawyer’s and other advisors’ support.  But you should generally leave the legal work to the lawyer, the tax and accounting aspects to the CPA, and the sale process to the broker or investment banker.  A good lawyer will know what issues and legal document provisions need to be more closely reviewed and considered by the client.  A good client will trust the lawyer to handle many details and document provisions that are more standard or boilerplate and don’t justify a lot of time and explanation.

‍Forgive Me. Lawyers, accountants, investment bankers, brokers and other advisors are human.  We will make mistakes, and the best among us own up to those mistakes.  And we lawyers are perfectly willing to serve as the black hat and take responsibility for certain negotiated terms so that our client can preserve a positive relationship with the buyer.  That said, it’s simply damaging to the client-professional relationship for the client to become overly demanding and critical of small things and, even worse, to throw the advisor under the bus when it’s not fair.  Buyers don’t even like to hear complaints about a seller’s counsel.  Yes, lawyers have feelings too, and the Golden Rule is usually very profitable.  The sale process will also usually involve a team of advisors who hopefully play well together in the sand box.  Each of them will have different responsibilities, but all of them should always attempt to share credit, avoid unnecessary jabs and row in the same direction.

‍Treat Me as Part of Your Team. Business sellers pay their lawyers and other advisors real money.  Some clients have difficulty seeing the value in fees and at times even express resentment about them.  I have on occasion had to state the obvious to these types of clients – than I’m on their team, I’m looking out for them, and I’m committed to working as effectively and efficiently as possible, not only to minimize my fees, but to add real value to the outcome of their business sale.  Hiring a lawyer for a big transaction and then not embracing them as a trusted advisor usually only diminishes their value to you. And if your team knows you trust the advisors you have selected, that will greatly expedite the process and enhance the outcome.

‍Value Me. Lawyers and other advisors work incredibly hard in negotiating and closing complex business sales.  The honest ones combine an appropriate level of humility (this can be valuable to the working relationship with buyer’s counsel) with great confidence that they can not only save the owner money but make more money for their client in the end.  A lawyer who feels valued and appreciated by their client is simply a happier, and therefore better and more effective, lawyer for the client.  And good, hardworking advisors are justified in expecting clients to treat them and their staff with mutual respect and decency.  When I look back at the deals I’ve helped business owners close, the ones in which I felt valued by the client were almost always the most successful.  People and relationships are important to value creation.  It’s not just business, it’s surprisingly personal, for both sides of the partnership.

‍Trust and Depend on Me. This is really a wrap-up or combined take away from the above 9 tips for enhancing the value of your advisors and your transaction.  Size up your advisors, tell them everything you believe they need to know, listen to their instructions and respond to their requests, consider, try to understand and take their advice, don’t try to take control of their part of the process away from them, stick to the business tasks and let them do the jobs you’re paying them to do, cut them some slack when they are obviously performing well overall, incorporate them into your C-suite and management team, see their value not only as insurance or a cost center but as a transaction value enhancing difference maker, and expect and demand the best from them.

You are the business owner and the boss.  Your vision, leadership and transaction process management will be core parts of a successful exit.  And if you “help your advisors help you”, the results should be more take-home transaction proceeds, less post-closing liability risk and a smoother transaction process.  Those results are what the best and trusted advisors want for a business owner client.   Like you and your business, lawyers and other advisors work in part to make money, which makes their reputation and satisfied clients paramount.  And the best professional advisors truly want to make a difference not only through excellent work but in the lives of the people comprising a business.  Selling a business is truly a team sport, and teamwork is the key to a good sale.