So you just got off the phone with your client...

He says he's sending you a freshly signed Letter of Intent from a strategic buyer that's been hounding him for months.

Did he get a fair value? Was it based on tax returns, actual EBITDA, adjusted EBITDA, or book value? Is it a “market multiple” for similar businesses that have recently sold?

Who knows — and unfortunately, it's a moot point: your client is now in a period of exclusivity. Assuming most of the terms are non-binding, he can try to make the best of the situation, or he can let the exclusivity run out and pay the buyer’s due diligence expenses.

Help your clients help themselves

As an attorney, getting ahead of a looming transaction allows you to better serve your client -- so they never make an uninformed decision — and it cements your role and reputation as a trusted advisor.

So how do you help? You could suggest an analysis to determine what the business might be worth to a corporate acquirer or a private equity fund. If your client is organized as a C-corp, understand why — then evaluate converting to an S-corp or LLC. Maybe you get minute books in order, make sure stock certificates are located and holders identified, and do away with any “right of first refusal” situations. Or work with your client to evaluate environmental risks, HR policies and records relating to things such as I-9s and interviewing and hiring practices, to ensure everything is compliant and non-discriminatory. (Did you get all that?)

Waiting isn't worth the risk

There's a lot to lose if your business owner client is thinking about a sale. You're in a unique position to address challenges up front, so that when a buyer shows up, your client understands the value of his company, and is in the best position to achieve that value — thanks, largely, to you.

Suggested reading: Don't believe Dick the Butcher