26 Oct Dealing with Your Clients’ Professionals
Frequent readers already know that Doug Robbins, the founder for Robbinex, is nothing short of a business broker legend. With decades of experience and countless successful transactions to his credit, Robbins is a wealth of information. In this article, we will jump in and explore some of his top tips for dealing with the challenges of working with client professionals such as lawyers and accountants. This article is based on his recent webinar “Working with Your Client’s Professionals,” which can be accessed here.
Always Keep Control of the Situation
One key piece of information that Robbins wants to convey is that you must always maintain control. In short, business brokers and M&A advisors must be the ones that “write the narrative” and not lawyers, accountants, or even clients.
If you fail to maintain control for some reason, that power vacuum will be filled by your client’s professionals, and the results could be nothing short of disastrous for everyone involved. Further, this situation could lead to your commission simply evaporating.
The Waiting Game
The dynamic between business brokers and their client’s lawyers is often exacerbated by the fact that many clients wait too long before bringing lawyers into the process. The end result is that clients pay more in legal fees and introduce a level of chaos as a result of their waiting.
Waiting too long before bringing in their lawyers can result in, not just increased professional fees, but it can also dramatically increase your closing times. As you can likely imagine, frustrated clients can often take out their frustration on their business brokers and M&A advisors.
Dynamics with Lawyers
Robbins feels that you need to be well aware that lawyers can be a significant impediment to the successful execution of deals. He also acknowledges that this sentiment may seem overly harsh, but it is also based on careful observation over the last four decades. In his considerable years of experience, he has found that about 60% of the time the buyer’s lawyer or the seller’s lawyer lacks the experience and expertise to properly represent their clients in the transaction.
The end result, not surprisingly, can be chaos, extra legal fees, and, of course, considerable headaches and complications for you.
Robbins points to one comically painful example in which a lawyer proudly prepared an 86-page agreement only to have the seller’s lawyer return the document with a staggering 803 changes. Those 803 changes translated into an extra $25,000 in legal fees for the seller.
He notes, “What we’ve learned over the years, and it sounds like I’m picking on lawyers, but I’m just stating the facts as I have seen them. Out of ten lawyers involved in the process, about forty to sixty percent, or four to six, should not be practicing business law.” Clearly, this state of affairs translates into a range of headaches and problems for everyone involved in your transactions.
Preparing in Advance
There are many other examples that Robbins points to where he has found that lawyers simply are not qualified. Further complicating matters is the fact that, on occasion, lawyers do not act in good faith. They will sometimes even try to interfere with a sale in order to try and buy the same business later.
Lawyers are, of course, necessary in the process of buying and selling businesses. Yet with that stated, Robbins feels that business brokers and M&A advisors must be on guard and prepared for dealing with lawyers.
In our next article, we’ll examine some additional steps that you can take to safeguard both yourself and your clients from the complications that arise from working with your clients’ professionals. Luckily, there are ways to protect all parties from these potential obstacles.
