Why You Need a Corporate Finance Lawyer Now

As a corporate finance lawyer with over 7 years of experience advising startups and small businesses, I have seen firsthand how having expert legal advice can make or break a company during key financial events. Read Why You Need a Corporate Finance Lawyer Now below for more information.

In this article, I will explain from my own experience why now is the time to invest in an experienced corporate finance lawyer if you are looking to raise capital, sell your company, or undertake any other major financial transaction.

The Value of Specialized Legal Expertise

Corporate finance law is a complex and constantly evolving area that requires niche expertise. Generalist business lawyers may be able to review standard contracts and formations documents. But when it comes to high-value financial transactions, you need a corporate finance lawyer who lives and breathes these deals every day.

Over my career, I have negotiated hundreds of venture capital financings, M&A deals, private equity investments, and other complex transactions. This deep experience has given me the judgment, insights and creativity to structure optimal deals that best balance risk and reward based on the specifics of each client’s situation.

A generalist lawyer simply won’t have the background and instincts developed from being fully immersed in these types of deals daily. And they are far more likely to miss important nuances that can have major financial consequences later on.

The Risks of Poor Legal Advice

I have seen firsthand deals go sideways because the founders received poor legal advice in the financing or transaction process. The financial impact of these mistakes can seriously hurt the business for years to come.

For example, one client had granted overly broad rights to their first investor without realizing the implications down the road. When new investors came in, the old investor was able to block the deal based on their existing rights, killing the new financing round the company desperately needed.

In another instance, overly restrictive terms in an acquisition agreement resulted in half the management team quitting shortly after the deal closed. These departures then reduced the value of the remaining company significantly.

With an experienced corporate finance lawyer guiding you from the start, risky pitfalls like these can be avoided or at least mitigated through thoughtful structuring and planning.

Navigating Volatile Markets

We happen to be in one of the most volatile market environments for financial transactions in over a decade. As interest rates rise and uncertainty grows, deals are getting re-priced and re-structured rapidly.

An experienced corporate finance lawyer knows how to guide clients through turbulent times like these. I lean on the lessons from previous market downturns to advise clients on pricing, contingencies, closing timing and other key issues given the current climate.

For example, we may stage closing payments across 6-12 months with milestone triggers to reduce market risk. Or implement contingencies allowing either party to walk if key assumptions like growth metrics or funding change beyond a certain threshold.

Having accompanied clients through multiple economic cycles, I can anticipate risks specific to the current conditions and address them proactively in our deal structure and terms. A generalist business lawyer simply doesn’t have the context to offer this level of tailored advice.

Demystifying the Legal Process

The legal process is filled with complexity and jargon that can intimidate uninitiated founders and executives. Experienced corporate finance lawyers act as translators and guides to demystify the process for clients.

Over the course of a transaction, I explain in simple English what each contract provision means and why it matters. We also prepare tailored explanatory presentations for company management and investors that boil down the key risks and tradeoffs of major deal terms.

This transparency helps build trust in the process and ensures all parties actually understand the deals they are agreeing to.

We also work closely with clients to prepare for tough questions and negotiate favorable outcomes. Before major negotiating sessions, we brainstorm on objectives, walk through scenarios, and develop strategies tailored to the specific investors and issues on the other side.

An expert guide like this brings confidence and clarity to what would otherwise be a confusing and nerve-wracking process for many founders and executives.

Avoiding Costly Lawsuits

Even with careful planning, major financial transactions can still result in legal disputes down the road. Securities class actions, breach of contract lawsuits and fraud allegations are an ever-present risk.

If litigation does arise in the wake of a major deal, you want to have worked with an experienced corporate finance lawyer from the start. We build a careful paper trail throughout the process demonstrating sound diligence and decision making. And we structure contracts and disclosures with future lawsuits in mind.

These preventative measures don’t eliminate the chance of litigation. But they place clients in a far stronger position to defend themselves and defeat claims before they reach advanced stages.

Having direct experience with these cases, I can attest the right legal guidance can save millions in legal fees and settlement costs over the long run.

Conclusion

As markets shift and business financing becomes more complex, it’s clear that startups and executives need experienced corporate finance counsel now more than ever.

Don’t wait until you are facing a urgent transaction or lawsuit to realize the value of a legal specialist in this area. Being thoughtful about lawyering upfront will pay dividends for years to come.

If you have questions about any aspect of corporate finance law and how an expert lawyer can help your business, don’t hesitate to get in touch. I’m always happy to offer my insights and guidance free of charge.