As a commercial law firm, we are very often called to assist our clients through mergers, acquisitions, management buyouts, venture capital investments and other transactions in which ownership of shares in a company changes hands. For a privately held company, especially a small one, these are critical moments that can profoundly affect the long-term health and sustainability of the firm.
Over the years we’ve seen pretty much everything there is to see: The successes, the mistakes and the occasional tragedy. Yet doing our own acquisition of another law firm proved to be extremely educational. At last, we really know how our clients feel through what is almost always a stressful process, even when everything goes well.
These are the most important things we learned:
1. Keeping emotion out of it is hard
As lawyers, we’re normally able to keep a certain objective distance from the negotiations involved in the sale of a company, or shares in a company. We work to get our clients the best deal we can, because that’s what professionals do: But it’s not our baby. Now that we’ve gone through a process where it is our baby – where we will be personally affected by the outcome for years to come – we understand why it’s so hard to be subjectively involved.
2. Change management is one of the keys to success
This is one of the things we all knew – but experiencing it for ourselves really drove the message home. We had to deal with how to merge systems and company cultures, how to nurture relationships through change and how to ensure staff had all the right incentives they needed to stay with the new, merged firm.
3. Remember the clients
We made a special effort to keep our clients well informed about what was happening and to reassure them about the continuity of the service they were used to: But even so, the conversations that followed were not always what we expected. It’s easy to forget that what seems obvious to everyone inside the firm need not be obvious at all to outsiders. Managing client perceptions and expectations should be a very high priority during the acquisition process.
4. There’s no such thing as too much paperwork
Nobody loves mounds of paperwork, but once again the lesson has been driven home: The more you get down on paper, the better. Make sure that what you think has been agreed has been written down and signed – or it’s not agreed at all. Intentions that are not written down in exhausting detail may be not be as clear as you think they are, and handshake and back-of-the-envelope deals are a recipe for relationship fallout. This is not just unpleasant; it’s a serious risk to the success of the deal.
