While mergers and acquisitions may be the right strategic path for many businesses, organizations tend to underestimate the role in-house legal teams play in a large-scale strategic transaction until the company is firmly entrenched in a deal.
While the CEO and board might fully appreciate the counsel of the legal team, the ability of the legal team to earn the support of the business — from product and development to marketing and HR — is critical to a smooth, efficient closing and post-close integration process.
Your in-house legal team should be held accountable for catching things specific to your business that outside attorneys will miss.
Having been on the inside of M&A transactions, here are a few insights that I recommend any executive team considering a major strategic transaction keep in mind when working with, and setting expectations for, the in-house legal function as the deal moves from business agreement to closing and through integration.Is this the right transaction to move the business forward?
When you’re thinking of M&A (or any other type of strategic transaction, for that matter), it is critical to understand why you’re pursuing a deal and what the potential implications (both good and bad) may be for the business at large.
As the executive or founding team, have you agreed that doing the deal is the best way to further the overall strategic business objectives? Is the proposed deal allowing the company to scale more rapidly or efficiently? Does the transaction provide for a more diversified, complementary product offering?
After settling that the deal is the best way to achieve the overall business objective, the next focus is on execution. How will the resulting leadership bring together the two organizations? Do you have a plan on how to go from closing the transaction to successfully moving forward with the strategic purposes for doing the transaction in the first place? Is there agreement on product direction, go-to-market strategies, staffing, company culture, etc.?
These high-level discussions are important to have while evaluating a potential deal, and bringing in your internal legal leadership is critical in these early phases. You may identify during these early discussions aspects that are critical for the deal to be a success, and being sure your legal team is aware of these aspects allows the team to anticipate post-closing issues and resolve them proactively with the structure of the deal or by explicitly calling out critical obligations of each party.
Your in-house legal team should be held accountable for catching things specific to your business that outside attorneys will miss. Outside attorneys are experts in M&A or IPOs or venture financings or whatever else, but your in-house lawyers are experts in your company — that’s the true value of having an in-house team.