The buying and selling of businesses has become so complex, that attorneys, accountants, investments bankers, and insurance counselors advising the buyers and sellers have had to continually broaden and deepen their skill sets in order to provide the best possible counsel to their clients, to help ensure the best possible outcomes.

     In fact, it has become commonplace for attorneys and accountant to be cross-credentialed and cross-trained in order to better serve as utility players on their client’s behalf. Many lawyers specializing in mergers and acquisitions are also accountants. And many CPAs specializing in M&A are also JDs. Both attorneys and accountants say that their roles in the process of buying and selling a company frequently overlap and both say this is not a bad thing. It helps the process running smoothly, and it helps anticipate and identify possible pitfalls along the way.

     Jacob Bayer, chair of the general business practice group at the Kansas City law firm Shughart Thomson & Kilroy, says that one of the most common pitfalls is a single-minded focus on getting a deal done that obscures objectivity. “They have to be willing to walk away from the table if necessary,” Bayer says. “Sometimes buyers and sellers become so fixated on the deal itself that they lose sight of their original reasons for wanting to buy or sell.”

     Tom Roszak, a partner in the Kansas City law firm Dysart Taylor, says that momentum in the direction of a deal can cause a buyer or seller to ignore warning flags. “It’s important to slow down at certain points in the process, to catch your breath and just be sure that you’re all seeing things as they are. Buyers are especially vulnerable to this. Being overeager is not in their best interests.”

     Mendy Kwetzel, a partner in the accounting firm Grant Thornton’s transaction advisory services says he sees the same problem in his practice.

     “We have to caution clients about the risks of the ‘zeal to deal’. Buyers become so enthusiastic about making the deal, that it becomes the end in itself. There is such eagerness to buy that they overlook things they should be paying closer attention to. And sometimes they end up paying more than they needed to pay. With both buyers and sellers we will sometimes see the actual running of their businesses begins to suffer. Not a lot. But enough to be noticeable. And enough to make you realize that you need to get them to keep their eye on the ball.”

     Bob Swisher, Senior Vice President in the Private Equity and Corporate Acquisitions Practice at Lockton

Companies in Kansas City, agrees. “We have to warn clients against becoming so enamored with the deal that it impacts the evaluation and they end up getting surprised.”

     Swisher explains that understanding the key factors that contribute to a successful transaction is critical in staying on course. Swisher says that the primary factor in a successful deal is that both parties have a thorough understanding of the business and its industry. “Buyers in particular need to understand the company’s potential for growth within its industry.”

     Attorney Bayer concurs. “Buyers must be willing to commit the time and resources necessary to fully understand the target, its business, and the dynamics of the target’s industry.”

     Doug Deady, of the Kansas City in-vestment bank Christenberry Collet, says that one of the most fundamental mistakes buyers make is simply not doing their homework, including a thorough study of the industry they’re buying into.

     “Come prepared,” Deady says. “Know who the players are in the industry, what the optimal business model looks like, and how you expect to finance the transaction. Have a sense of the kinds of returns you expect to make from the business, the end-markets you will be selling into, your strategic and tactical marketing plan, and what you expect your cost structures to look like. These will help your investment banker or financial advisors do the financial models you need to value the target and understand if the transactions you are considering make financial sense.”

     Attorneys, accountants, and bank-ers agree that a well-structured, com- prehensive, and strictly adhered to due diligence process is the best way to keep transactions on track. But here conflicts can arise if the parties to the deal have unrealistic expectations of how long the process may take. 

     “First of all, do substantial due diligence on the business itself and analysis of the financial information prior to entering into the Letter of Intent,” says Edward E. Frizell, shareholder and Corporate Practice Group Chair, at the Kansas City law firm Polsinelli Shalton Flanigan Suelthaus PC. “The Letter of Intent, even though non-binding, will help solidify the purchase price in the parties’ minds. Secondly, after you sign the agreement and prior to closing, when the major due diligence is done, make sure you spend the time and the money to do an accurate due diligence so you catch the problems before you pay and while you still have an opportunity to adjust the purchase price to ensure you get the deal you expect.”

     Bayer points out that the attorney’s role in the process is quite complex and is specifically designed to uncover surprises before they become surprises. It’s a bit more involved than buying a house. “We assist in preparing the due diligence request. We monitor the responses and match those to the representations and warranties in the seller’s definitive documents. We review and analyze all the legal issues and advise the client on risks and means of reducing, removing ameliorating the risks we discover.”

     It all takes time.

     Lockton’s Swisher points out that an insurance advisor specializing in M&A is an important part of the due diligence team, facilitating the entire process.

     “We provide insurance/risk management and employee benefits analysis due diligence services to assist the buyer in evaluating their target com-pany, enhance the buyer’s negotiating position, positively impact the insurance and employee benefits expense and help to facilitate the transaction. In addition, the deal may present other liabilities or exposures that can be mitigated by other transactional insurance products such as environmental programs and representations and warranties insurance.”

     Christenberry Collet’s Doug Deady says that, on the end of the spectrum opposite the “zeal to deal” is the fear of failing. Buyers and sellers, especially those who’ve never engaged in the process before must overcome their initial fear of doing a transaction.

     This anxiety can have a similar effect as the unstoppable momentum to closing a deal—it can distract a buyer or seller from the original objectives of the deal.

     Grant Thornton’s Kwetzel has seen this phenomenon in his practice.

     “The buyer or seller is so anxious that when, as is inevitable, unexpected delays or unanticipated costs or contingencies arise then they’re inclined to run. Just quit the process altogether. But the deal is probably still fundamentally sound. All the reasons for doing it are still there.”

     Polsinelli’s Frizell says the process needs to unfold at a deliberate pace. “Most of the conflicts that arise between the client and the attorney/accountant during the process relate to balancing the client’s desire to get the deal done and the attorney/account’s desires to have the opportunity to analyze the business and do an appropriate due diligence procedure and to get the client to spend the time and the money to go through that process,” says Frizell. “The best thing the buyer and seller can do to make the process easier and less stressful for everyone is to first have a realistic opinion of the process and, secondly, let everyone do their job.”

     Dysart Taylor’s Roszak sums it up best. “Understand that you can’t remove emotions from the process of buying or selling a business. Businesses are, after all, fundamentally, a set of relationships and relationships are inherently emotional. But you need to manage the emotional aspects of a transaction.

Keep your eyes on the prize.”