Poor Legal & Accounting Advice


A typical sale of a business is not simply facilitated by a business broker or M&A advisor. “As a matter of fact, a successful transfer is always a team approach” says Achim Neumann, President, A Neumann & Associates, LLC, a leading New Jersey-based mergers & acquisitions and business brokerage firm, “and a well-functioning interaction between the three professions will guarantee the best outcome for all parties involved.”

Unfortunately, realities are often different.

With the M&A advisor having facilitated the introduction between buyer and seller, this professional also has typically the best personal relationships to both parties – quite different than the attorneys or CPAs who only join the transfer process in a later stage and can only converse with their respective principal on the buy or sell side. Quite often this ends in ‘political jockeying’ by the principal advisors, often resulting in sub-par advice to execute a transaction – one of the worst examples being an attorney generating $100,000+ billing for a small transaction of $2m.

All too often, sellers will follow their comfort level and simply rely on a legal buddy when choosing legal support —for example, someone who has bailed them out of a divorce or a recent traffic ticket—to help them with the sale of their business. Unfortunately, such an attorney is often highly incompetent.  Within the seller’s preparatory context, it is very important that the owner selects a qualified transaction attorney well ahead of any contemplated transaction, preferably right after the valuation is received and the decision to move forward with a sale of the business is made. Certainly, such early consultation will result in some expenses, but this step will pay off handsomely in the end.

The focus here must be on the transaction, not on attorney. Like any other field, the legal profession is highly specialized, and for example, the seller will derive little benefit of hiring a former county prosecutor representing him or her in a $10 million business sale. Such an attorney will know very little about commercial business transactions and will therefore either slow down the process or completely kill the deal.

By far the most toxic combination for any deal is a seller who refers all questions to an attorney, especially, if that attorney perceives as being hired to focus solely on protecting the client and not to move towards a deal closing. In this type of situation, a deal will never be closed. The attorney will always find yet another aspect to be secured in a deal—all along generating more legal fees—in a never-ending negotiation attempt.

Similar challenges exist for recruiting tax advice. The business’ current CPA is well aware that after the closing of the transaction, her/his services are no further needed as in all likelihood the buyers will bring in their own accounting team. Thus, the implication is that – at times – a considerable revenue stream for the CPA firm will no further exist. No question, some CPAs will tend to ‘prolong’ the negotiations or in a few scenarios, even attempt to undermine the transfer.

In sum, within the context of selecting the right advisors, a seller (or buyer) must ensure to take an active role in all aspects of the transfer. The objectives of a legal or tax advisor are not always completely aligned with the objectives of the principals and ignoring these facts can have a devastating outcome – despite all intentions and motivations to close a deal.

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[The blog contains excerpts out of the recently published book “ The Road BeyondWhat Nobody Tells You About Selling a Midsized Business by Achim Neumann]

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business broker firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating and over 5,000 valuations performed through its affiliation, the company has senior trusted professionals with a deep knowledge base in multiple field offices in Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, DC, Virginia and North Carolina. The firm’s competitive fees are based on successfully completing


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