Part 3 – Planning a business acquisition
Declaration – the author of this paper is an admitted lawyer with a Principal Practicing Certificate admitted to practice in the Supreme Court of Queensland and the High Court of Australia.
Whilst personal bias may lead this author to naturally gravitate to the position that the Lead Consultant must be a lawyer, it would be unwise to proffer this view prematurely. That said, there are some circumstances where this is the natural conclusion as a result of the analysis. However, in any Acquisition a lawyer is likely to play an important role.
Scope of work for the Advisory Team
Using the framework utilised in Part 1, it can be seen that to answer this question the nature of the Target, the characteristics of the Acquirer and the anticipated scope of work for the Advisory Team should be considered to first determine the composition of the Advisory Team before then appointing a Lead Consultant.
Situations where the Lead Consultant should be a lawyer
There are many situations where the Lead Consultant should be a Lawyer. For example where it’s likely that there is multiple Main Barriers to be overcome, numerous conditions precedent and where the regulatory regime is complex it could be that the Advisory Team could benefit from a Lawyer as the Lead Consultant. That said, the particular individual lawyer must not be a black letter lawyer and most importantly must have significant project management and leader skills as described in clause 3.1 above.
Does the Lawyer have the project management skills?
If after analysis it seems that the ideal Lead Consultant would be a Lawyer, it is essential that they have project management and leadership skills to lead the Advisory Team to successfully complete the Acquisition.
If you are considering appointing a Lawyer as a Lead Consultant, ask them at short notice to put together a project management plan on the proposed Acquisition. If they are not able to produce a simple Gant Chart, showing all the anticipated dependencies, and discuss the issues impacting on the timeframe, then it’s likely they don’t have the required skills.
Case studies
The Black Letter lawyer as Lead Consultant
A Black Letter lawyer is defined, in the context of business acquisitions, as “a lawyer that sticks to the ‘black letter’ of the contract, to the extent that they disregard the Management Representative instructions because they have to comply with the express terms of the contract”. We came across a situation where a Black Letter lawyer was removed as the Lead Consultant as they refused to allow the client to proceed to completion because of a likely delay in one of the domain names to be transferred (which was not material to the operation of the Target). The contract was not being complied with, but the item was not important to the client and would have been capable of being waived and remedied after completion. Moreover the cost of a similar domain was more than the time taken discussing the matter with the Management Representatives!
Avoid those with Excessive Dogma
The goal of most Lawyers is to maximise the amount of units (Six minute increments) they bill. Therefore, the notion of project management where an imprecise scope of work is to be managed within a certain budget within a timeframe is in complete contrast to this goal. In business acquisitions rarely do Lawyers complain when the scope of work changes because of unforeseen circumstances. Take care to avoid a Lead Consultant with Excessive Dogma
Further information
If you would like further information about whether the Lead Consultant should be a lawyer, contact us for a confidential and obligation-free discussion:
Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
T: +61 7 3221 0013 (preferred)
M: +61 419 726 535
E: mburrows@dundaslawyers.com.au
Disclaimer
This article contains general commentary only. You should not rely on the commentary as legal advice. Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.
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