Before bringing a company for sale to the market, we always counsel our clients to have a thorough legal review conducted by a seasoned M&A lawyer, often in cooperation with the company’s long-time business attorney. We suggest they focus on three areas in particular:
- CONTRACT COMPLIANCE: For major contracts with customers, suppliers, and others: are they up to date, are they properly executed, and are the parties in compliance with the terms?
- REGULATORY COMPLIANCE: Are you in compliance with significant regulatory requirements such as ERISA, OSHA, DOD, FAA, employment, environmental, and local permits.
- LITIGATION: . What is the current status, prospects for resolution, and expected financial exposure from any significant disputes, including actual or threatened litigation.
As we have learned over the past 22 years, the best approach is for the seller to be aware of any and all potential legal problems long before buyers get involved, so the seller can work to mitigate these problems and retain negotiating leverage. We have seen how poorly the inverse works – when sellers fail to conduct a comprehensive legal review before they start a sale process. That usually results in the buyer gaining significant negotiating leverage late in the process, at a time when the seller has few alternatives.
As you have heard us say many times before, one of the most important aspects of our work is helping clients prepare for a sale. Along with the other preparation items that we have mentioned in our Deal Notes in the past, an M&A legal review is one of the most important.
Have a great day everyone.
Managing Director, Aerospace