“Get the Right Lawyer”
When buying a company, get a good attorney. Here are two recommendations on what to look for:
1. Find a deal closer, not a deal killer. Almost every company has some skeleton in the closet. Prepare yourself that this will come up in due diligence.
No need to throw the deal away when you inevitably find it. Specify the issue in the contract and negotiate it properly. The key piece of legal due diligence to understand is, that the goal is still to get the deal done. If and when you find something, the trick is to mitigate the risk in the purchase agreement.
Closers understand this and work to find an acceptable middle ground. Killers take protection to the extreme and you end up with no deal.
2. Until you have built trust with the attorney, ask not only for an estimated cost of the due diligence and closing but also set a ceiling. Ask for cutoffs every 30 days in the process to see where you are at on cost versus proposal and ceiling.
We got very lucky with our US attorney. Not only is he highly capable, but he is a closer and extremely fair on his billing. This has led us to give him 100% of our work in the US and become a steady client year over year as we continue acquiring companies.
I have seen counterparty attornies drag their feet in a deal, negotiate every point ad nauseam, and run up bills that were double what we paid for the same transaction.
Bonus Point if you made it this far:
The first US business we acquired was structured as an asset sale. When buying assets the legal due diligence will be light. The issue with an asset purchase is if the company has multiple contracts (think product manufacturer selling via big box) then these can be very tedious to get moved over to the new entity.
Lately, we have been buying the companies either outright or via FReorg. This allows for a seamless transition but involves a more thorough legal due diligence.
As always, ask your attorney which is best for your transaction. Just make sure you follow the first two recommendations before hiring them!