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What Were They Thinking? Not Coordinating Key Aspects of the Deal

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Author Ray Horn, Attorney, Meltzer, Purtill & Stelle LLC 

Always Row in the Same Direction 

The “art” of negotiating well is a must for a successful transaction, however, there are many nuances to consider.One such area often overlooked is sufficient coordination and commitment between clients and their advisors.

Lack of sufficient coordination and commitment is like two individuals rowing a boat in opposite directions, they will simply go in circles, essentially going nowhere even with great effort.Though certainly an obvious point in nautical circles, application of this adage in M&A transactions is often spotty.

Recently, a buyer client was encountering issues with a Seller group, including an attorney uncomfortable with the M&A process (where have you heard that before?), where there was a disagreement among the Seller principals, and a clear misunderstanding of using negotiating leverage.The client wanted to break the logjam, not only to move the deal forward, but to reduce legal costs.After consulting with the client, we decided on a “reset” strategy, in which our client would compromise on a select number of points, stand firm on the remainder, and send the message through a revised “final” agreement draft as well as a “cover” email to clearly lay out some context and avoid misunderstandings.The process required some careful telegraphing of this “messaging,” including coaching the client to prepare for direct lobbying from the Seller group in order to dilute and diminish the intended effect. We proceeded confidently, having been assured by the client that he was ready and committed – he wanted to move the needle and push through the back and forth.

After delivering the “message,” we expected silence from counsel, even though we had requested that counsel direct any response through us (as noted, counsel was not very comfortable in this arena).However, we did not expect the client backsliding that occurred with the anticipated call to our client by the Seller group.That call revealed our client to be much less firm than he had indicated to us, which in turn emboldened the Seller group and undermined the carefully crafted message, producing the very result the client fervently wished to avoid – a lack of resolution and additional time and expense.We had ended up back where we started.

Yes, almost every “plan” requires at least some adjustment when wading into the fray, but at some point, the parties need to decide what is acceptable and what is not and communicate that position with clarity and conviction.In this case, a message was delivered, the Seller group understandably “tested” the firmness of that message (much as a teenager might test one parent when the other parent lays down a rule), and the client failed the test with a lack of conviction, essentially undermining the messaging.Understandably, clients can be cautious in drawing a negotiating line while they are also developing a relationship with a key transaction party, but getting to “yes” can require saying “no,” particularly there is a need to confirm a message already delivered. Focusing too much on avoiding conflict can actually create confusion about where one truly stands and result in time inefficiencies, risks, costs and even termination of an otherwise viable transaction.In the end, this deal did close, but it unfortunately required a great deal more time and cost than was otherwise necessary.

Raymond J. Horn Ill is an attorney with Melzer, Purtill & Stelle LLC.  Focused on providing responsive, well-balanced corporate transactional advice with respect to acquisitions and divestitures of closely held companies, “business divorce” matters, and corporate planning involving contracts such as buy-sell agreements.  Contact Ray at

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