Process Management, Not “Legal Jargon”
Due to a lack of resources and experience with M&A processes within the company, the advising attorney often has to go beyond their purely legal role to take on process management for the entire purchase/sale process and handle communication with third parties, such as advisors and government agencies.
Since companies usually lack “translators” of legal jargon, the attorney must be able to explain complex issues and legal topics to all parties involved without using incomprehensible legal jargon. Questions from clients and the opposing party must be answered patiently and, if necessary, repeatedly.
A Special Understanding of the Unique Situation Faced by the Parties
In addition, medium-sized transactions involve a difficult psychological component:
When entrepreneurs sell their life’s work, they are generally in a state of upheaval. On the one hand, they want to protect themselves from being taken advantage of; on the other hand, they also want to safeguard the company from what they perceive as a harmful future trajectory. Furthermore, the sales process is usually uncharted territory. The same applies to a buyer. The acquisition of a company always involves risks. The buyer does not know whether the company will develop as planned or become a burden.
As a result, the parties are often under a great deal of stress. It is not uncommon for individual statements or behaviors by the other side and their advisors to be given more weight than is strictly necessary. To avoid misunderstandings that can unnecessarily strain negotiations and even cause them to fail, it is important to build and maintain trust between the parties.
Beyond purely technical expertise, the advising attorney must therefore take into account certain fundamental “soft” factors to ensure that they do not themselves hinder the transaction or even contribute to its failure, but rather lead it to success even under difficult circumstances.
These legal “soft skills” are indispensable:
First, it is important to proceed with particular caution and with the necessary sensitivity to the expectations—as well as the concerns and fears—of all parties involved. Above all, this requires active listening. A good M&A advisor should, of course, also build a personal relationship with the other party and, for example, be directly available to answer questions if the other party’s advisor agrees. Any concerns expressed by the client or the other party should not be taken lightly or even dismissed as “nonsense,” but must be taken seriously.
To build trust and avoid misunderstandings, it is also important to act consistently. Once deadlines have been agreed upon, they must be strictly adhered to. Verbal agreements reached during negotiations must later be fully reflected in the documents to be negotiated. Otherwise, the opposing party might get the impression that they are not being taken seriously or that they are even being taken advantage of. While these are actually self-evident principles, it is still frequently observed that deadlines and commitments are carelessly disregarded, thereby unnecessarily complicating the process.
Of course, the lawyer’s personal feelings have no place in the negotiations. The entire process is never about the lawyer, but solely about the client’s best interests and a successful transaction.
If these basic principles are observed and all parties treat one another with respect, a large portion of the soft factors that can cause a transaction to fail are eliminated, and negotiations can take place in a pleasant and businesslike atmosphere. Stalled transactions can regain momentum through confidence-building measures. Of course, transactions can still fail—for example, because due diligence reveals that the companies are not a good fit after all, or because an agreement on the purchase price simply cannot be reached during negotiations.
However, if the atmosphere is respectful and free of tension, a major step toward a successful transaction has been taken. The M&A attorney plays an important role in creating and maintaining this atmosphere, thanks to their experience and the fact that they are less personally involved.
