Ask the attorney: Should I hire a pro negotiator now that I have a buyout offer?
(Editor’s note: “Ask the Attorney” is a weekly VentureBeat feature allowing start-up owners to get answers to their legal questions. Submit yours in the comments below and look for answers in the coming weeks. Author Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a boutique corporate law firm specializing in the representation of entrepreneurs.) Question : We just got an offer to buy our company for a sweet pile of cash, but we don’t know what the next step is. My father said we should hire an investment banker and let him handle the negotiations. Do you agree? Answer : Congratulations! Without knowing more about the deal and the proposed purchase price, it’s hard to say. I practiced law for a number of years in New York City, and it was pretty rare not to have an investment banker involved in an M&A transaction. Here in California, it’s a little different since most of the deals tend to be relatively small. A strong investment banker can add a lot of value — not only in connection with negotiating the material terms of the transaction, but also valuing the company and making sure that you’re not selling too low. A strong banker will also create a competitive environment (or the perception of one) and play bidders off of each other to make sure you get the best possible deal terms. The problem in the lower middle-market space (e.g., $5-50 million sale price) is that it’s sometimes difficult for entrepreneurs to find a strong investment banker. A lot of the bankers I have come across in California are more like business brokers, simply trying to close two or three deals a year. This creates a certain inherent conflict of interest. They don’t get paid if the deal doesn’t close
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Ask the attorney: Should I hire a pro negotiator now that I have a buyout offer?