5 ms·
When dealing with private equity, there are three things to remember: 1.) You may negotiate with them two or three times in your life. They negotiate with peop
by hluska 2y ago
When dealing with private equity, there are three things to remember:
1.) You may negotiate with them two or three times in your life. They negotiate with people two or three times a day. You are the least experienced and most vulnerable party.
2.) They are not your friends. They’ll pretend but they’re not. If you’re in music, think better paid A&R with fewer morals.
3.) If a term can sink a deal, they were never interested in signing. Adults can deal with disagreements without crashing the whole plane.
- bankcust08385 2y agoIf it's not fatal, don't "marry" a third-party of questionable integrity for some cash.
- tptacek 2y agoThis particular story doesn't seem like a negotiation failure so much as a grave failure of this person's legal counsel in drafting the final agreement.
- hluska 2y agoThey chose the wrong counsel - they went to a general practice firm as opposed to finding a lawyer capable of navigating 1 - 3. A lawyer may be great at holding little old ladies’ hands while preparing their wills. That does not mean they’re qualified to deal with PE.
- tptacek 2y agoThe legal work handling our side of the Matasano acquisition was nosebleed expensive, and it was specialized.
- smcin 2y agoCan you give more constructive advice on how to find a lawyer that both can draft a non-trivial agreement with PE, and is affordable? What specifics do you look for?
- tptacek 2y agoYou're looking for M&A lawyers, presumably pedigreed (from a large firm with a well regarded M&A practice, for instance). Your normal contracts counsel should have good thoughts about referrals.
- smcin 2y agoWhat about all the people who don't have a normal contracts counsel?
- tptacek 2y agoLook, at the point where you're selling a company in a multimillion dollar transaction, some of these excuses go out the window. Get a lawyer, and then ask your lawyer for a referral to an M&A practice. Company acquisitions are a shitload of specialized work; it's honestly weird for me to hear that a general practitioner handled this person's earnout contract.
- deleted 2y ago[deleted]
- smcin 2y agoIt's not an "excuse". I'm surprised that you've never seen bad lawyer referrals. You honestly haven't? (and I'm not talking about general practitioners). I've also seen a (pedigreed) General Counsel that sank a tech company.
- hluska 2y agoHonestly pal, if you’re in a position to sell a company for the kinds of dollars that PE deals with, you needed a lawyer a long time ago. I understand that they’re expensive, legalese is intentionally difficult to understand and lawyers aren’t builders so they’re not worth funding. I understand those excuses because I’ve used them. But you needed a lawyer a long time ago. If you actually don’t have someone who deals with contracts, terms and things like that, fix that first.