As a financial advisor, Brooke Lively helps lawyers prepare their law firms so they can sell. Figuring out your non-negotiables is the key to making a deal you won’t regret.
What things are so important to you that you would walk away from a deal if they weren’t included? There might not be any, but you’d better make sure before you sell. Why? Because sellers tend to think a lot about their sale after it happens. And the last thing you want is to end up with regrets.
Before You Start Negotiating to Sell Your Law Firm
Think of it this way. When selling your firm, you are interviewing the potential buyers just as much as they are interviewing your firm. The goal is to find the best match as quickly as possible. Time spent with a potential buyer who doesn’t pan out wastes everyone’s time and money. So you need to know what you want out of the deal and be upfront about it.
This starts with having a great list of non-negotiables that you can easily articulate.
Think through your deal requirements before, not after, the sale.
A friend of mine sold his business last year, and I was fascinated by his experience. He did two things centered around non-negotiables that I believe allowed him to spend less time on the sales process and feel more confident when it was complete. The first was clearly defining his non-negotiables, and the second was creating a deal-killer letter.
One exercise achieves both goals, so let’s get started.
Exercise: Figuring Out Your Non-Negotiables
Non-negotiables fall into five categories:
- Price
- Deal terms
- Your team
- The transition
- Post sale
Once you have clarity about what you want in each of these areas, you can create what I call the “deal-killer letter.” The deal-killer letter is simply a one-page summary of your non-negotiables. It allows a potential buyer to see if this transaction will work for them or not.
If you are like most of the attorneys I hear from, you are probably thinking, “I’m not ready to sell, so why does this matter?”
Why would you want to wait until you are selling your firm to really crystalize what is most important to you when it comes to your firm?
The first two categories — price and deal terms — aren’t as relevant early in the process. The third category, your team, is something you can address now.
I don’t think anything in your firm is more important than your team.
Your Team and Culture Non-Negotiables
Figuring out your non-negotiables for your partners and employees will help clarify what is most important to you during the transition and after the sale. For example, consider your non-negotiables in terms of the following — are there people, policies, terms or special arrangements you want to keep in place?
- HR policy
- Tenure
- Core values
- Shareholders
- Benefits
- Working conditions
- Management/Leadership
- Employees
- Culture
Culture is at the heart of what your firm is and what it achieves.
Jim Collins came up with his famous bus analogy when talking about teams, culture and businesses:
The executives who ignited the transformations from good to great did not first figure out where to drive the bus and then get people to take it there. No, they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it. They said, in essence, ‘Look, I don’t really know where we should take this bus. But I know this much: If we get the right people on the bus, the right people in the right seats, and the wrong people off the bus, then we’ll figure out how to take it someplace great.’
– “Good to Great”
Are the people in your law firm a core value match? Are they part of your tribe? Until you can define who you are as a group and ensure you have the right people on the bus, you will never gel and achieve your potential.
With this in mind, let’s get back to your non-negotiables.
What is so important to you that you would kill the deal?
Can you name it?
Can your team?
Are they the same things?
If not, I would suggest that your culture is not strong enough for you to achieve your goals.
For more information about how to write a deal-killer letter and to access additional free resources, go to ExitOnTopBook.com.
Photo by Dustin Tramel on Unsplash
Calculating How to ‘Exit on Top’
If you want help calculating an approximate value for your law firm, go to www.ExitOnTopBook.com to access the valuation quiz from my book, “Exit On Top: Sell Your Law Firm to the Right Person at the Right Time for the Right Price.”
More Law Firm Financial Tips from Brooke Lively
For more tips on building a more profitable law firm, read:
- What Is My Law Firm Worth?
- Why You Should Prep Your Law Firm to Sell — Even If You Don’t Want to Sell
- What Makes a Law Firm Attractive to Buyers?
- What Should Be on Your Law Firm’s Dashboard
- Are Your Law Firm’s Financial Systems Ready to Scale?
- Law Firm Profits: 5 Ways You May Be Sabotaging Your Firm’s Growth
- Law Firm Overhead: What It Is — and What It Isn’t
- Building a Law Firm That Pays You First
- Understanding Law Firm Profits — And What to Do With Them
- Funding Growth: Are You Starving Your Law Firm?
