Legal Blog

M & A Nuggets: Red Flags

warningWhat may be contrary to our assumptions, studies have shown that most business purchases do not succeed. Sometimes, the best deal is the one that does not occur. To avoid closing a bad deal, the purchaser should be on the lookout for certain red flags. Some are obvious, such as substantial litigation, declining revenues and profits and a seller that engages in a particularly risky enterprise, such as one that regularly transacts business with environmental issues. Some red flags, however, are not so obvious. Red flags that are more subtle, but that can spell disaster for a business combination, include 1) a lack of symmetry in business culture between the purchaser and the seller; 2) the seller’s lack of proper recordkeeping, whether of financial books and records, corporate documents, human resources files or otherwise; 3) a seller who is unable to express a rational reason for sale; and 4) a seller who appears recalcitrant in their position and/or somewhat aloof in the negotiation process. These last two items should especially be evaluated early in the process. Otherwise, you could be negotiating with a seller who is not “all in”, wasting months of time and resources on a fruitless endeavor. manuggets subscribe2

ABOUT GLENN D. SOLOMON

Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With 120 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eight offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect. You can connect with Offit Kurman via ourBlogFacebookTwitterGoogle+YouTube, and LinkedIn pages.  You can also sign up to received Law Matters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.

MARYLAND | PENNSYLVANIA | VIRGINIA | NEW JERSEY | NEW YORK DELAWARE | WASHINGTON, DC