There’s an old adage that “time kills all deals.” But time isn’t the only thing that kills deals.

Engaging an attorney with little or no M&A experience - and zero PE deal experience - can put a seller at a real disadvantage and potentially kill the deal.

Most acquirers, especially PE-backed firms, do deals frequently and rely on attorneys who specialize in them.

Sellers, by contrast, often turn to their everyday attorney for all things legal.

Sure, their everyday attorney is trusted and competent and typically has deep relationships that go back decades. That attorney may have formed the entity, handled leases, set up trusts, or served as a longtime consigliere.

As exceptional as these attorneys might have been in their prior endeavors, they lack the expertise to represent sellers in M&A or PE transactions and go toe to toe with the opposing counsel.

And this is clearly not the time to be anyone’s first rodeo.

In my years advising on CPA firm M&A, and more recently on PE investments in CPA firms, I’ve seen too many sellers rely on counsel who simply did not live and breathe these transactions.

In these cases, I’ve urged firm leaders relying on everyday counsel to engage attorneys with extensive deal experience- and often referred them to these specialists.

Why? M&A and PE deals in any profession or industry already have their fair share of complexities, but CPA firm deals are especially nuanced.

Traditional mergers of CPA firms typically involve a revenue-based valuation, little or no upfront cash, and “payment” largely in the form of deferred compensation.

I often use the following story to illustrate how this works. Sammy Smith founded his firm 12 years ago and built it up to a reputable 15 million dollar practice with some strong niches. Larger firms were pursuing him to merge in his firm. We identified the ideal partner firm for him, resulting in a $20mm valuation.

Sammy called his wife and excitedly proclaimed, ”Honey, I just signed the deal, it was valued at 20 million, can you believe it!?!“

When Sammy arrived home that evening, his wife greeted him in her nicest dress with a bottle of champagne in one hand and two glasses in the other. “Sammy, let’s pop the cork and celebrate. Then we can go on a shopping spree and talk about a new boat and a vacation home.” Sammy replied, “Honey you don’t understand. I’m not getting any money now. I plan on retiring in about 8 years. Then, once I retire, I‘m getting paid out over 10 years. So, you have to wait a while before we get fully paid."

His wife placed the glasses on the counter, put the bottle of champagne in the fridge, slammed the fridge door, and stormed out of the kitchen. That was the last time Sammy saw his wife.

This was the traditional CPA firm M&A deal.

The recent influx of PE investment in the accounting space has changed the dynamics and structure of these acquisitions. Terms of these deals include upfront cash, rollover equity, various earnouts, “engineered” EBITDA, scrapes, EBITDA-based valuations, and more. These components give rise to additional nuances and complexities.

Given the above, using counsel unfamiliar with CPA firm M&A and PE deal structure, terminology, concepts and negotiation dynamics is a recipe for disaster.

Bottom line is this: Your transaction may be the most consequential decision of your professional life. Make sure your attorney has done this before. A major M&A or PE transaction should not be anyone’s first rodeo.