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James Dawson, a partner in the firm’s Business Department, was quoted in VIEWPOINT, a publication of Mirus Capital Advisors, Inc., on July 1. Jim discusses how first-time sellers arrive slower than repeat sellers at the understanding that P&S agreements are all about allocating risk. “Issues about their company become very personal,” he says of first-time sellers. “The concept of economic risk allocation is more difficult for them to grasp.” 

Jim cautions first-time sellers to avoid giving away key points in the letter of intent. “Unfortunately, a lot of key provisions of the P&S agreement can be negotiated away early in the letter of intent (LOI) and you’re often stuck with what you agreed to in the LOI,” he says. “This happens more frequently than you’d think.  There are companies that live their lives without having a relationship with a lawyer or an investment banker they call on for advice and counsel. I see sellers who will negotiate the first couple of rounds of the LOI and then send it to me. When I point out an issue that presents a problem, they say, ‘Oh, but I already agreed to that.”