Sources of delay
It’s a common and often justified criticism of advisors to corporate deals that they charge a lot of money for an apparently disorganised and slow process.
There are various reasons why a corporate transaction can be delayed, and some of these can be outside anyone’s control. An isolated example would be the need to get the consent of a third party (eg the Financial Conduct Authority) to completion of a deal in the financial services sector. Many other similar examples exist of 3rd parties that can be the source of delay.
Management of the process
However, the deal process itself, how it is managed, and the role of the advisors in strongly directing the process, are all critical factors here.
Transactions, large and small, tend to follow a similar pattern in terms of process – for example, heads of terms leading to the appointment of legal advisors, leading to drafting of legal documents and negotiation of these.
It is very easy for parties to drift into a “process” and for clients – quite rightly – to have a sense at times that the process is just on autopilot. Deal “drift” can arise, where it can seem that parties are reacting rather than actively pursuing the next stage of a negotiation. Coupled with this, weak communication lines can lead to a sense of frustration and unease on the part of a client who doesn’t understand exactly what is going on at any given stage – all they can see is frantic email traffic on points they either don’t understand, or which may not be relevant to their commercial wishes.
Much of this is down to simple factors – communication, proactivity, and strong management of the process. Project management and organisation is at the foundation of any successful deal. Commonly this falls to the corporate finance advisors at the centre of the transaction, who will direct process, timetable and milestones. This is not always the case, in the absence of a project-management role being assumed by a CF advisor, good corporate lawyers will instead drive the process.
Collaboration
Critical in all of this is fostering a sense of collaboration and teamwork – firstly, between advisors on your team – the lawyers talking the same language as the accountants, and working together effectively. But also, a collaborative approach between buy-side and sell-side is something that creates a high degree of trust and can materially impact timetable in a positive way. Rarely do we work with clients who enjoy the sight of us “going to war” with our opposite numbers – this rarely serves the client, increases frustration, anxiety and cost, and delays the timetable.
And – critically – what matters are the desired commercial outcomes for the clients. Good deal-management is an exercise in tuning into the client’s drivers and commercial requirements, advising on those, and getting them achieved. All too often lawyers attempt to impose on clients their view of what things should look like, and mistaking this for good advice.
What’s the answer?
The key foundations for an efficient deal process are simple – fostering a collaborative approach, focusing on the desired commercial outcome, being highly organised, and driving timetable in a proactive manner. Getting off email and into a meeting room works wonders.
The complexities of a transaction may nonetheless mean that it takes several weeks or even months to complete, but the advisors are central to this – it’s all about their taking ownership of the process.
