In our experience, the prevalent factors driving this shift are:

(1) A large number of first-time sellers in the marketplace;

(2) Many sellers are relying on counsel who may lack meaningful transactional expertise;

(3) Key owners/operators of targets are increasingly staying on with the business after closing; and

(4) Institutional backers of buyers are taking more active roles in negotiating transactions with and on behalf of their platform companies.

For any seller, the benefit of having counsel well-versed in the mechanics and principles of negotiating and driving a deal to close is important. This makes it more likely that seller counsel can help their client see individual deal points as part of the bigger picture and enable sellers to see how or why something they may have thought was a "must-have" for them may no longer be as important given movement on other deal points during the negotiation.

This guidance is even more important for first-time sellers unfamiliar with the sale process and how movement on certain issues impacts the underlying rationale for the sell-side position on other deal points.

In instances where first-time sellers in the middle market engage counsel who have little to no experience with deal work, the lack of experience or understanding of key legal concepts which are the foundation of the deal structure can cause major delays in the deal process and sometimes even stop a deal dead in its tracks.

As we've seen first-hand on recent transactions, this lack of meaningful transactional experience and understanding of the underlying transactional principles has not only left seller counsel unable to effectively advise their clients in the aforementioned fashion, but has had the opposite effect.

Instead of explaining the impact initial negotiations have had on the overall landscape of the deal and the subsequent adjustments they can or should make, these lawyers advise their clients to hold the line on initial positions (which may now be irrelevant or unfavorable in light of updated facts) or even to make additional demands.

Adding even more pressure to the mix, hands-on capital partners tend to be more inclined to drive the pace of the deal harder and faster and less willing to stomach offering up additional concessions simply to drive a deal forward.

Understanding that the buyer's capital partners also need a strong post-closing relationship with the sellers, the ability of buyer counsel to develop similar trust with their client's capital partners enables buyer's counsel to make recommendations directly to both the buyer and its capital partners with far less scrutiny than there normally might be from a buyer's capital partners.

This also provides buyer counsel the latitude it needs to be the true driver of the deal, rather than the buyer or its capital partners, which, in turn, allow the buyer and its capital partners to focus on building rapport and trust with the sellers instead of pushing back and forth with sellers on open deal points.

In these instances, we've found that taking the time at the outset of each transaction to work with seller counsel, and if we maintain a truly collaborative approach (including suggesting all-hands calls on specific questions), the idea that all questions need to be worked on a counsel-to-counsel basis or directly through the business parties tends to wash away.

As such, not only does seller counsel tend to both trust and rely on buyer counsel's input on topics they may not totally comprehend or have the resources to thoroughly review, (i) the trust between seller, buyer, and buyer's capital partners continues to grow, and (ii) a natural trust tends to develop between buyer counsel and sellers over the course of the deal cycle due to our representation of their future partners.

Where this scenario may have previously involved, (i) buyer counsel taking seller counsel to task, (ii) counsel from both sides going back and forth on these points on their merits, or (iii) a situation where buyer or its capital partners put pressure, or even an ultimatum, on sellers, the new collaborative relationship model — resulting from buyer and sellers forthcoming post-closing working relationship and the collaboration among buyer, buyer's advisors and their capital partners (and the trust created therefrom) has enabled buyer counsel to coach sellers and their counsel through the issues at hand.

The collaborative process allows the parties to get to the root of the concern at hand more readily and allows us to successfully drive all parties toward a mutually beneficial solution — a solution that is sometimes completely different from the original positions taken by each party with respect to the issue at hand.

It allows us to remind all parties that our positions and our advice are predicated on representation of the buyer in its capacity as sellers future partners (and soon to be representation of their interests post-closing), and, as a result, that it is in no one's best interest for us to "pull the wool over anyone's eyes" on any issue related to such transaction. This allows us to drive the deal forward where buyer and/or sellers may have previously walked away under the old approach.

In these same instances, had we beaten down on the sellers and seller counsel with regards to a given disagreement, we could very well have come to an impasse on the transaction. We've found that this give-and-take approach and the trust resulting therefrom often leads everyone to look to us, the buyer counsel, to find and implement a solution.

This allows us far greater control over the deal process, the resulting terms of the transaction, and any hurdles along the way. In these situations where you may otherwise be tempted to play hardball with seller counsel, which may result in your requests falling on deaf ears, it is more effective to simply coach seller counsel and its clients through the issue at hand together.

This creates the right balance of pushing towards a common goal, while still being kind and welcoming to sellers who are going to come into your client's family of companies and whom, as a result, you'll likely be advising after the close.

Typically, all parties want to close, get the deal done, and move on, focusing solely on the acquisition. However, after the closing, outstanding questions can remain unanswered: What's the plan? How does the founder fit in? How do buyers exercise control? How do the buyers and sellers collaborate together in terms of decision making and operations?

These are important considerations and need to be addressed. However, if you take the time to focus on building trust at the outset, the payoff can be immense and many of the questions raised above will be addressed over the course of the deal-making process.

Consider all of the relationships at play in a series of strategic acquisitions. Each party has its array of third-party advisors. For the buyer, advisors will likely be working on each of said buyer's strategic acquisitions. Traditionally, the buyer serves as the go-between for all of its advisors and the ultimate driver of the transaction.

But is having the buyer serve as the go-between the most efficient approach, particularly where the buyer's capital partners are also taking an active role in the deal process and both need a strong working relationship with sellers post-closing?

If every decision is discussed internally among the buyer and its capital partners, then fanned out across other advisors, and then sourced back through the buyer to the other advisors, time is lost, the buyer's key people must devote time to funneling information instead of focusing on the business, and important elements can be missed.

The same trust-built collaborative process at play among the parties and their respective counsel is equally beneficial to build between the buyer, its capital partners, and all of its third-party advisors and allows counsel to drive the deal on the buyer's behalf.

This has the dual benefit of (i) freeing up the buyer and its capital partners to focus on the business rather than sourcing and funneling information and (ii) allowing the buyer to place its counsel in the most naturally contentious role in the deal process in its stead.

This provides buyer and their capital partners far greater flexibility to build their relationship with sellers and lets their counsel slog through the sometimes uncomfortable and frustrating heavy-lifting of walking both sellers and its counsel through an issue that neither may properly understand.

Further, if a client knows they are about to embark on a series of strategic acquisitions using the same advisors, or, at a minimum, the same counsel, you can sit down with the client, their capital partners, their accounting firm, their insurer, and any other key advisors to map out a game plan for these transactions.

In doing so, we've found this often results in our ability to create form transaction documents and a standardized diligence process, each of which has been vetted by all necessary third-party advisors.

Rather than working in our individual silos and passing information back and forth, the collaborative process can synthesize everyone's input into a choreographed and practiced process. This allows all third-party advisors to be on the same page about the preferred deal structure and frame respective input on any newly proposed transaction with the same structure in mind.

As questions or comments arise throughout the transactions, the aligned parties are able to make note of them and come together to map out a collective approach to address these questions or comments for the transaction at hand and with an eye toward future transactions.

This has the additional benefit of allowing us to share with sellers and their counsel that we have done this same type of transaction numerous times using the documents and procedures being offered up and we find sellers take a certain level of comfort in knowing that their contemporaries entered into a similar transaction with similar terms and conditions.

Taking a minute to step back and build the process of trust around these strategic transactions allows the second hit (and the third, and the fourth) to be more efficient. It also affords us as counsel to the buyer far greater latitude to run a successful transaction when dealing with a first-time seller and/or an attorney who may not have as much experience handling complex transactions.

First and foremost, it's important to keep deals moving forward and get them closed. We do this by extending understanding and courtesy to first-time sellers and, when the need arises, to their counsel, rather than trying to embarrass or railroad a first-time seller or their counsel (particularly, where their counsel may lack meaningful transactional experience).

Extending that understanding and taking the time to explain the underlying rationale or offer up concessions where they may not always be necessary, is a tremendous way to build trust which will pave the way to a smoother closing and pay dividends in the post-closing relationship — both between the buyer and sellers and between the sellers and buyer counsel.

This is uniquely relevant when representing a client in a series of strategic acquisitions where there is a higher likelihood of ending up across the negotiating table from the same seller counsel. In these instances, where we have seen the same seller counsel make a repeated appearance across the table from us in a series of strategic acquisitions for the same client, we have instant trust with seller counsel as a result of our work together on a previous transaction.

On top of that, by having taken the time to create the form documents and coordinated diligence process, if we end up working with the same seller counsel again who may otherwise struggle to advise their client on certain elements of the transaction, we have already successfully completed a transaction with them using these same documents and processes. Their familiarity with the documents and the processes removes the need to start the negotiation process from square one.

As in any deal, it's also important to determine the priorities for each party involved at the outset and use that as a driving factor. Make sure you fully understand not only what is behind your client's positions, but also what is driving the position of the seller, and, perhaps more importantly, what interests are driving said stated positions.

In our experience, 99.9% of the time people follow stated positions without paying attention to the motivating factors behind said positions. In those instances, information critical to finding a solution can be lost.

If you can identify the motivating factors driving the outcome a party is trying to achieve, you can come up with a path to get them there with little resistance along the way. Successfully guiding both the target and their counsel towards a shared common goal in everyone's best interest is, again, predicated on taking the time to build and solidify that underlying trust.

Relationships have always been critical to negotiating a successful transaction, but with whom and how we interact throughout the deal process is evolving. There's an artform to leveraging these relationships that affects all aspects of a deal in terms of how we develop, diligence, negotiate, and ultimately drive transactions forward.

1 https://on.mktw.net/3pK8UoX

2 https://go.ey.com/3nDCbPl