You've worked for years to build your company and have decided that the time is right to harvest your labors. It is now important to organize a team of inside and outside professionals that will carry you successfully through the merger or IPO (initial public offering).
Three years ago, the firm that I worked for had grown from a small start-up to a major player in its industry sector. It was time to address a merger and to seek a partner who could help propel the company into the international stage.
One of the first steps is to decide who from your management team needs to be intimately involved with the transaction, and then augment that group with some — if not all — of the following: a broker, an attorney and accounting professionals. One of your biggest decisions will be the selection of your legal counsel.
You may not be able to utilize the same attorney who has worked with you through your growth years. Depending upon your industry, your counsel may be steeped in intellectual property or contract law, real estate or litigation issues.
Structuring the deal, working with securities regulations, protecting your tax position and closing the transaction may stretch the limits of your current counsel — and sometimes the capabilities of the law firm.
At my firm, we made the decision to look for outside counsel to help with the complicated issues that we would face and decided to interview (mostly by telephone) several attorneys from various firms. Most responses from the attorneys went something like this, "My firm is your logical choice because we are big (or we are the best or we have significant experience)." Everyone claimed to be qualified to know what would be best for our firm.
Then we had a different conversation.
A partner from a big Silicon Valley firm took our interview in a new direction. He said, "My philosophy is to keep the parties between the 40-yard lines." He explained that any complicated transaction would involve many issues that could kill a deal. One party or the other might be inclined to approach negotiations with the attitude that to "win" they would need to pin the opposition against the goal line.
He explained that we would not get everything we wanted, neither would the other party, but his main objective would be to protect us while getting the job done. And to him that meant keeping options open out near the middle of the playing field.
We decided to retain his firm. After weeks of tough negotiations, we began to see the wisdom in his approach. Though we had "deal-killer issues" on the table, he always played in the middle of the field. When we pushed too hard (we wanted to play with our opponent's back to the goal line), he would pull us back to the playing field and we would find room in the issue to continue to play ball.
We learned from this individual the art of negotiating a complex transaction. He had many of the same skills as the other attorneys we had interviewed, but he had the additional talent of knowing how to play the game — that is — he had the "attitude" to make it work for both parties.
We concluded the negotiations successfully. Both parties were required to give up some yardage to complete the game. We got most of the important issues that we wanted because we gave the other party room to play.
Staying in between the 40-yard lines allowed us to move the ball without alienating the opposition.
Gary Williams, a former CEO of a high tech firm, is affiliated with the BYU Center for Entrepreneurship. He can be contacted via e-mail at email@example.com