Mergers and Acquisitions Attorney: Counsel From LOI to Closing

A business purchase or sale involves a series of decisions that need to fit together. The price in a letter of intent matters, but so do the assets or ownership interests being acquired, the obligations each party assumes, the conditions to payment, and the work required before closing. An M&A attorney helps a buyer or seller translate those decisions into documents and coordinate the legal work around the transaction.

Acquisition Stars represents buyers and sellers in business acquisitions. Alex Lubyansky leads engagements, reviews documents, and leads negotiation and closing, with an associate supporting the work. The firm practices nationwide from its Novi, Michigan office. The scope of a particular engagement depends on the transaction and the agreement with the client.

What does an M&A attorney do?

The attorney's work begins with understanding the business, the parties, and their objectives. A buyer may need to know which contracts are essential to operating after closing and how a payment obligation is secured. A seller may need clarity on what will be paid at closing, what remains at risk afterward, and what continuing work is expected. The documents need to answer those questions in a way the parties can perform.

Structure and initial terms

The attorney can help compare an asset purchase, an equity purchase, or another proposed structure with the client's objectives. That review includes the target entities, assets, liabilities, contracts, tax advice, approvals, and operational continuity. The structure described in a proposal needs to match what the parties intend to transfer and what each expects to retain. Explore our deal structuring services.

Counsel can also draft or review a letter of intent. It may address price, payment, the proposed structure, diligence, exclusivity, conditions, and the expected sequence of the transaction. Some provisions may be intended to bind the parties while others express terms still subject to negotiation. Ask counsel to identify the intended effect of each provision under applicable law before signing. See the LOI guide for questions to bring to that review and the LOI and purchase agreement comparison for how the documents differ.

Diligence and purchase documents

Legal diligence examines the target and the proposed transaction. The work can include entity records, material contracts, employment, intellectual property, disputes, financing, and regulatory matters. The relevant scope depends on the business and the assets or interests involved. Counsel can coordinate legal questions with the client's accountant, financial adviser, and other specialists, and identify findings that affect the terms or the decision to proceed. Learn about our due diligence services.

The purchase agreement then records the negotiated transaction. It can address the transferred property, assumed obligations, payment, representations, disclosure schedules, covenants, closing conditions, and remedies. Ancillary documents may include a seller note, escrow agreement, transition services agreement, employment agreement, or assignments. The team should read these documents together so the practical obligations match the agreed economics.

Compare an asset purchase with an equity purchase

In an asset purchase, the parties identify the assets being transferred and the obligations the buyer agrees to assume. In an equity purchase, the buyer acquires ownership interests in the entity. The agreement, governing law, contracts, and facts determine the consequences of either structure. A purchase agreement's allocation between buyer and seller does not by itself resolve every potential claim by a third party or regulator.

Check the contracts and operations behind the structure

Identify which entity holds the lease, employs staff, owns intellectual property, and contracts with customers and suppliers. Review change-of-control, assignment, and consent provisions in the agreements that matter to the transaction. Also identify licenses and regulatory permissions that need a separate analysis. The operating plan should show who will deliver services and hold necessary rights after closing.

For example, a buyer interested in particular equipment and a customer relationship should identify both in diligence and determine what documents are needed to transfer them. A seller who expects a lease guaranty to end should obtain the actual release rather than assume a sale accomplishes it. These are examples of questions to resolve in the documents; the outcome depends on the relevant contract and applicable law.

Coordinate the tax analysis

Tax results depend on the assets, entities, structure, and parties. The IRS guidance on the sale of a business explains that a business sale can involve separate assets with different tax treatment and discusses allocation of consideration. Ask a tax adviser to model the proposed structure and allocation before the parties settle the economics. Transaction counsel can then coordinate the agreement with the advisers' conclusions.

Prepare an LOI that supports the transaction

An LOI helps the parties identify the commercial terms they intend to negotiate. Price alone may leave important decisions open. Separate the proposed closing payment from seller financing, an earnout, escrow, rollover equity, and adjustments. Determine what information the buyer needs during diligence and what the seller needs to evaluate the buyer's financing and proposed transition.

Review exclusivity and conditions

Exclusivity can affect the seller's ability to discuss other proposals during the agreed period. Review its scope, duration, termination, and relationship to diligence milestones. A buyer should understand the access needed to evaluate the target. A seller should understand what information will be requested and how it will be protected. Conditions concerning financing, approvals, and contracts deserve clear ownership and a plan for resolving open items.

An LOI can focus later negotiations. Diligence may reveal new issues, and the parties may or may not reach a final agreement. Keep a list of assumptions that support the offer and revisit them as information arrives. If a material assumption changes, identify the proposed response and record any agreed change in writing.

Turn diligence findings into decisions

A useful diligence process connects each request to a decision. Begin with a document index and identify the owner of each request. Track received materials, missing items, follow-up questions, and the person responsible for deciding how to address an issue. Financial, operational, tax, and legal findings can then be considered together rather than in isolation.

Buyers: examine what must continue

A buyer should identify the customers, suppliers, employees, systems, property, and permissions necessary to operate the acquired business. Review whether key rights are held by the seller, an owner, or a separate affiliate. Compare the operating assumptions supporting the offer with the documents and information provided. If an agreement restricts assignment or a required consent is uncertain, assess that issue before treating the closing plan as complete.

Diligence may also reveal liens, disputes, or contractual obligations that affect the deal. Counsel can help determine whether a finding calls for additional investigation, a change in structure or price, a closing condition, a disclosure, or an allocation of risk. The right response depends on its significance and the client's objectives. Explore our buy-side M&A services.

Sellers: prepare disclosures and the transition

A seller can organize entity records, contracts, employee information, financing documents, and material disputes before requests arrive. Review the proposed representations with the people who know the business and compare them with the disclosure schedules. The schedule should be prepared with care and checked against the agreement, rather than treated as an administrative attachment.

Discuss the intended handoff early. Determine who will communicate with employees, customers, landlords, and other counterparties, and what information is needed to obtain any consent. If the seller will continue working or provide transition services, review those duties and payment terms alongside the purchase price. See the due diligence guide for a broader overview of the process and our sell-side M&A services for seller representation.

Negotiate payment, risk, and closing conditions

A purchase agreement should make the economics understandable. Identify the amount due at closing and the calculation of any post-closing adjustment. For a seller note, review the borrower, payment schedule, security, subordination, and remedies. For an earnout, examine the metric, accounting rules, information rights, dispute procedure, and decisions that could affect the result. Model the consequences with financial and tax advisers.

Representations and warranties describe statements made in the agreement; disclosure schedules identify agreed exceptions. Indemnification provisions can allocate specified risks and may include limits, procedures, and time periods. Escrow or holdback arrangements can affect when funds are released and what claims may be made against them. Review these provisions as a system: a favorable headline term may operate differently when read with its exceptions and procedural requirements.

Closing conditions identify events or documents that must be addressed before the transaction closes. Use a checklist to assign responsibility for signatures, approvals, releases, funds flow, and deliverables. For transactions requiring Hart-Scott-Rodino notification, the FTC explains that parties may close after the applicable waiting period has passed or early termination is granted. Determine whether the rules apply to the particular transaction using current requirements and counsel's advice.

Plan the handoff and post-closing obligations

The end of negotiation is also the beginning of an operating transition. Identify who will manage employee communications, customer notices, systems access, vendor relationships, and the transfer of records. If services continue between the parties, specify the services, charges, responsibilities, term, and process for resolving problems. Coordinate any transition arrangements with the purchase agreement and applicable confidentiality and privacy obligations.

After closing, the agreement may require an adjustment, an earnout calculation, an indemnification notice, or a release of escrow. Record the dates and procedures in the signed documents and assign a person to monitor them. A buyer and seller can each benefit from preserving the records needed to calculate amounts and respond to questions. Counsel can assist with interpretation or disputes within the agreed engagement scope.

How to choose transaction counsel

Ask a prospective attorney how their experience relates to the proposed deal and which work the engagement covers. Identify who will lead negotiations, who will draft and review documents, and how the team will communicate with the client and outside advisers. If the transaction involves a regulated business or another jurisdiction, ask how counsel will coordinate any specialist or local advice needed for the matter.

Request an engagement scope and discuss the fee arrangement, expected deliverables, and circumstances that could change the work. Provide the current proposal and explain the decision you need to make next. This allows counsel to identify the immediate legal questions and how the transaction work may develop as diligence proceeds. See the M&A attorney cost guide for additional questions to ask.