When selecting a law firm / counsel for a search fund, what are the types of diligence and questions you might ask?
Understand that:
-referrals can be helpful
-ideally someone with commercial sense who can balance the legal with business objectives and who doesn't serve as an obstacle to getting a deal done
-prior experience and knowledge in Search is quite helpful
What other qualities/skills/experiences do you look for and are there conflicts of interest to be aware of?
Selecting legal counsel for SF
by a searcher
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Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
(a) listening skills (ability to read physical and emotional queues beyond just the spoken word). I can't describe the number of times I've been able to get a deal when I had a sense that if I were creative on item 3, I might be able to get my way on items 1, 2, and 4. Amazingly, everyone was happy that they got what they wanted at the close;
(b) ability to get to a close. This may be a close cousin to (a) because it sometimes translates into the ability to get ego out of the way. Will your attorney fight over something meaningful -- to you? Or, just try to win an argument? For example, the other side said they'd sign the papers that day but needed an extra $3K. My attorney berated and slammed the guy. My attorney proudly reported back to me how he'd given them the what-for-- thinking I'd like that posturing. I was like, "Call them back! Take the deal! We said time was of the essence in getting this to close," After the beatdown, the other side was so insulted that we couldn't get them on the phone again.
and my personal tie-breaker:
(c) enthusiasm/passion for the subject. They're more fun to be around and (I believe) more likely to be creative.
- Cost: push your prospective lawyers to be specific on their fees and the expected overall cost of the project, including areas where you can save on legal fees without significantly increasing your risk. Call around so you can get an idea of price ranges within your target market.
- General expertise in M&A - I strongly suggest you find a lawyer that dedicates a large portion of their practice to acquisitions. A lot of general business lawyers will be more than happy to take on a deal, but if you know where to look, you can likely find more specialized knowledge for a similar price.
- Trustworthiness - It's critical that you trust your attorney to be honest with everyone involved, especially you.
- Alignment of objectives - What is the more important objective in the transaction: Closing the deal, or managing legal risk? Make sure your lawyer is on the same page.
- Specific expertise tailored to your deal. - For some industries, you will probably want to consider truly niche expertise to review contracts, discuss compliance concerns, etc. Using someone like ^Searchfunder member for data privacy, for example. This person (or firm) may or may not be separate from your acquisition counsel.
- Ability to Communicate Clearly - Do you understand what your lawyer is saying? You should.
- Flexibility - What about flat fees? Broken deal discounts? Sliding fee scales? Can your lawyer think outside the box on structural details to make things work? Do they have the emotional intelligence to work co-operatively with other intermediaries to protect your interest but not jeopardize the deal by being a jerk? Jerk lawyers can drive up legal costs and ruin deals.
Those are a few thoughts off the top of my head. Thanks as always to Searchfunder member for the mention!