When do you share CIM with lawyer/accountant?

searcher profile

October 06, 2020

by a searcher from The University of Arizona - Eller College of Management in Denver, CO, USA

Hi all - I'm a first time buyer, was wondering when do you buyers usually share the CIM with their lawyers/accountant and engage them for their perspective? Pre-or-post LOI?

Thank you!

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commentor profile
Reply by a professional
from University of Minnesota in Minneapolis, MN, USA
I'll address your question from a legal perspective (full disclosure - I'm a lawyer). While I certainly don't think it's necessary to run every aspect of a potential deal past legal counsel, a lot of it depends on your relationship with your attorney. If you have a trustworthy attorney that isn't going to milk every possible billable hour from you, I think a good practice is to run everything by him or her and discuss whether it makes sense to have an extensive review or even to edit the CIM.

It's not a common practice, but I personally think more attorneys should offer a reasonable flat-free review for documents like a CIM/NDA, or whatever you want to call it. If you're working with an attorney already, propose it. If you're shopping, ask if that's an option. A CIM shouldn't take an experienced lawyer very long to read through for any wild red flags, which is what I imagine you're having a lawyer read it for in the first place. A few hundred bucks AT MOST should get the job done, and I'd imagine if you propositioned it right, a lot of attorneys would do it for cheap (or free) in hopes of getting to work the deal.

If you don't fully trust your attorney to bring a practical approach to preliminary documents like LOIs or CIMs, then ask around the M&A space to find one (commercial bankers and accountants are a good starting point - I'm more hesitant about counsel recommended by brokers).
commentor profile
Reply by a professional
from New York University in New York, NY, USA
It's always recommended for first-time Buyers to talk to M&A counsel before submitting an LOI as it is difficult to negotiate new protections/accomodations for the Buyer after the LOI has been agreed. Convincing a seller that you didn't talk to counsel beforehand and therefore you missed an issue is going to be a credibility issue. That said, on smaller deals or where you are trying to keep costs down, you may be OK without it as long as you built in some flexibility into your LOI and have someone with deal expertise (doesn't have to be a lawyer) giving you advice.
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