Mergers and acquisitions transactions involve more than just drafting contracts. It includes due diligence, negotiations, regulatory compliance, risk management, and protecting clients’ interests. If you’re preparing to buy, sell, or merge a business, having the right legal advisor by your side is important.
However, not all mergers and acquisitions law firms can offer the same level of experience or knowledge. So, which is why it is important to ask the right questions before hiring an M&A lawyer that help understand whether they are right for you or not.
Key Questions to Ask Mergers and Acquisitions Law Firms
1. How Much of Your Practice Is Focused on M&A?
There are numerous areas of business law, ranging from labor to contracts, intellectual property, and litigation. M&A is no less specific; therefore, there are numerous factors that make this sphere distinctive.
Find out how important mergers and acquisitions are for the work of a certain lawyer, whether he deals with them on a regular basis or only occasionally offers his services in this sphere.
Such a question will help you understand whether you deal with just a lawyer or a specialist in the sphere of M&A.
2. Have You Handled Transactions Similar to Mine?
No two deals are identical. The nature of the deal, size of the transaction, and industry determine the amount of legal work needed. An experienced lawyer would already know some of the difficulties associated with similar deals.
Some of the deals for which you should check if your lawyer has experience are:
- Business acquisitions
- Business sale
- Asset acquisition
- Stock purchase
- International deals
- Family businesses transfer
3. Do You Have Experience in My Industry?
Understanding of your particular industry can really help in the acquisition or sale process.
There are industries like healthcare, information technology, manufacturing, construction, finance, and others that are regulated in their own ways. A lawyer who knows about the industry you are in will be able to see potential problems that might go unnoticed by others.
It is not always necessary to have a lawyer who has previously represented a company just like yours.
4. Who Will Be Working on My Transaction?
During an initial meeting, you might interact with a partner, but most of the daily work can be done by the associates and other legal personnel on the team. Knowing about the legal team of mergers and acquisitions law firms and their roles will help set up your expectations for communication and decision-making.
Questions to ask would be:
- Who is my main contact person going to be?
- Is there going to be a partner working throughout the transaction?
- Who oversees the documentation that is being prepared?
5. How Do You Approach Due Diligence?
Due diligence is one of the most crucial stages in an M&A deal. It entails investigating various issues, including legal, financial, operational, and regulatory, before the closing of the deal.
Inquire from the lawyer about how they usually conduct due diligence and what issues they feel are most crucial.
The response may shed some light on how well they investigate any risks and present their findings.
6. How Will You Communicate During the Deal?
An M&A deal is generally multi-stakeholder and deadline-driven. Consistent communication will keep everything on track. Effective communication avoids mistakes and contributes to the process.
A few helpful questions are:
- How often will I be updated?
- What is the typical turnaround for my emails/calls?
- Whom shall I approach regarding any other queries?
- How do you synchronize with accountants/tax consultants?
7. What Challenges Do You Expect in a Transaction Like Mine?
Each deal presents its own set of risks. A seasoned attorney should be able to talk about the possible risks without making any assumptions regarding the result. This discussion will help you understand how an attorney sees and manages legal risks.
Depending on the nature of the deal, these risks may include:
- Restrictions on the assignment of the contract
- Approval from regulatory agencies
- Employee-related liabilities
- Tax-related liabilities
- Intellectual property-related issues
- Funding requirements
8. How Are Your Fees Structured?
Legal costs depend on the complexity of the deal and the structure of the law firm’s billing system. The aim is not to find the cheapest rate but rather to know how the costs are determined to avoid unpleasant surprises during the process.
Before you hire a lawyer, it is essential to know the following:
- Hourly rates
- Retainer requirement
- Total cost
- Extra costs
- Billing frequency
9. How Do You Handle Conflicts of Interest?
It is common for M&A deals to include several businesses, investors, lenders, and advisers. Inquire whether the lawyer has represented any of the parties involved in your deal, and how conflicts of interest are identified and managed. Law firms should have protocols in place for handling any conflicts of interest.
10. Can You Explain Your Role Throughout the Transaction?
Many entrepreneurs think that an M&A lawyer simply looks at the agreement before closing. However, legal advisors can assist in many areas, even starting from the planning stage. It is useful for you to know which tasks a lawyer will perform.
Find out what kind of services are usually covered by a lawyer, including:
- Transaction structuring
- Contract drafting and negotiation
- Legal due diligence management
- Coordination with other advisors
- Assistance in closing
- Post-closing issues
11. Can You Share Examples of Similar Transactions?
Although the lawyers may not be allowed to talk about confidential information, they will still be able to provide you with examples of transactions they have been involved in. It will enable you to have faith in their experience as well as learn how they handle certain situations.
Questions to ask:
- Deal size
- Types of industries
- Challenges faced legally
- Experience gained from previous transactions
Final Thoughts
The purpose of hiring an M&A attorney is to find someone who not only knows the ins and outs of the legal side of things but also understands the practical side of the deal. By asking some intelligent questions, you will be able to assess the level of experience, the communication skills of the lawyer, as well as his or her industry knowledge.
Instead of considering only qualifications or costs, try to gain insight into how different merger and acquisition law firms operate. Make the right choice with Klay Legal from the very start can facilitate your transaction.
FAQs
1) What are the necessary questions to ask about mergers and acquisitions law firms?
Ask about valuation models, deal structure, expected synergies, hidden liabilities, timeframe required, and other important questions regarding the deal.
2) What are the types of Mergers and Acquisitions (M&A)?
There are four primary types of Mergers and Acquisitions (M&A). The types are Horizontal, Vertical, Congeneric, and Conglomerate. These categories define the goal of the transaction.
3) What are the associated risks of M&A?
If failed to ask important questions from mergers and acquisitions law firms, then poor due diligence is one of the most common acquisition risks that one must face.
4) How to check if my company is ready for a merger?
Ask your M&A lawyer if they require a legal checkup beforehand. Since you’re deciding to sell your company, potential buyers look at every aspect of the company. An experienced lawyer would help identify concerns and opportunities in your business.
