Management Meetings and the Second Round: The Attorney's Role

Preparing the owner for a room full of buyers

Most owners have never presented their business to a professional acquirer. They have told the story to customers, employees, and bankers, and the version they tell is usually too long, too modest about the numbers, and too candid about problems that have already been disclosed without useful framing. The attorney's preparation session fixes this.

The preparation covers three things. The narrative: a thirty-minute version of the CIM, in the owner's words, that leads with what the business does and why it makes money and gets to the numbers within ten minutes. The questions: the attorney should give the owner the twenty questions buyers are most likely to ask, drawn from the Q&A log and the data room activity, and should rehearse the answers. The lines: what the owner should not discuss, which includes anything about other bidders, anything about price or structure, and anything about the owner's personal timeline or motivation beyond what the CIM already says.

A dry run is worth the time. The attorney plays the buyer and asks the hard questions: why is the top customer at 30 percent, what happens when you leave, why did margins dip in the second year. The owner who has answered these once in a conference room with counsel is better prepared to answer them in front of a buyer. The attorney should also tell the owner which topics require a pause and private consultation before an answer.

What the attorney does in the meeting

The attorney should attend every management meeting when that responsibility is within the engagement. Not as the main presenter, but as the person who opens the meeting, sets the agenda, keeps time, and closes it. The owner presents. The attorney listens for three things.

Questions that reveal a concern. A buyer that asks three questions about the lease may be signaling that the lease will matter in the LOI. A buyer that asks about the owner's willingness to stay longer than the CIM states may be signaling its structure. These go in the attorney's notes and into the preparation for the LOI negotiation.

Statements by the owner that go beyond the disclosure record. Owners, when they are enjoying the conversation, say things that are not in the CIM and not in the data room. Some are harmless. Some are new facts that now require a decision about whether and how to disclose them to other buyers. Some are projections stated as commitments. The attorney notes each and, after the meeting, reviews with the owner which items need a follow-up disclosure. The attorney should not make a business disclosure decision for the client without the client's direction. ABA Model Rule 1.2 places the client's objectives with the client and calls for consultation about the means of pursuing them. [1]

Requests for direct access. Buyers in the second round may ask to visit the facility, meet the management team below the owner, and speak with customers. Each request is a decision for the attorney to discuss with the client after the meeting, subject to the engagement and applicable law, not a commitment to make in the room. Facility visits may be workable, with care about employee visibility. Meetings with key managers may be workable for buyers whose certainty is high, with the managers prepared the same way the owner was. Customer calls are often deferred until the seller has more protection, such as a signed LOI or another agreed process milestone. The attorney should explain the risk and obtain the client's direction.

Keeping every buyer on the same information

The second round is where information discipline is hardest, because meetings are conversational and buyers ask different questions. The attorney's process rule should be that any material fact disclosed to one buyer in a meeting is reviewed promptly and, when appropriate, disclosed to all second-round buyers in writing afterward. The client and attorney should decide what is material and what form the follow-up should take. This approach supports a comparable process and reduces later disputes about what a buyer was told. It also respects the attorney's obligation to protect information relating to the representation and to make disclosures only as authorized or required. [2]

Tier two of the data room should open to all second-round buyers at the same time, with the same contents, unless the client has a documented reason for a different sequence. Supplemental documents requested by one buyer should be considered for all. The Q&A continues through the firm on the schedule set in the process letter, and answers continue to go to the buyer that asked, with material answers going to everyone who needs the same information.

The attorney should also manage the calendar so that no buyer gets an avoidable advantage from timing. Meetings should be spaced within a week or two of each other when practicable, and no buyer should have its meeting more than a few days before the others without a reason the client accepts. A buyer that meets the owner three weeks before the LOI deadline has more time to prepare than a buyer that meets the owner three days before. The schedule should account for that difference.

Setting and holding the LOI deadline

The LOI deadline is set at the start of the second round and communicated in a second process letter. That letter states the date, the form of the LOI, and what the seller expects it to contain: a firm enterprise value rather than a range, the full structure, the working capital target or the method for setting it, the source of funds with evidence of commitment, the exclusivity period requested, the diligence scope and timeline, the key terms the buyer expects in the purchase agreement, and any conditions. Some attorneys send a draft LOI or a term sheet template with the letter so that the responses are directly comparable. Others ask for a markup of the seller's form. Either way, the buyer's LOI should be as detailed as the seller can make it, because every term left open is a term the buyer may try to resolve during exclusivity. An ABA overview describes the LOI as a blueprint for the proposed deal and notes that it commonly covers price, structure, exclusivity, diligence, and binding versus nonbinding provisions. [3]

The letter should also describe what happens next: the seller will select one buyer, negotiate the LOI, and grant exclusivity only on execution if that is the seller's chosen process. Buyers should understand which terms the seller expects them to address and whether any provisions are intended to be binding. The LOI is not automatically binding or nonbinding in every respect, so the attorney should draft and explain its terms rather than assume the label resolves the question.

The deadline is held the same way the IOI deadline was. A buyer whose investment committee meets two days after the deadline may get two days, and so may everyone else. A buyer that wants another week is told the deadline stands unless the client decides to change the process for all similarly situated buyers.

The attorney's second-round notes

At the end of the round, the attorney should have a file for each buyer: the IOI, the management meeting notes, the questions asked, the data room activity, the requests made and the answers given, and the LOI. That file is what the attorney uses to advise the client on which LOI to accept and how to negotiate it, and it is the file that makes the attorney's judgment about certainty and fit more than an impression. It should distinguish buyer statements from seller decisions and identify any disclosure sent after a meeting.

One thing to do this week: write the twenty questions a buyer would ask an owner client you know, and sort them into the ones the owner can answer well today and the ones the owner would struggle with. The second list is the preparation session, and it is a useful exercise before any process starts.

How Acquivo Pro fits

Acquivo Pro keeps every second-round buyer's record in one place: the NDA, the IOI, data room access by tier, and the questions asked and answered, all in the single pipeline the firm uses for every client. When a management meeting produces a new fact, the attorney can see which buyers need the supplemental disclosure and record that it went out. The attorney prepares the owner, attends every meeting, decides every access request with the client, and sets and holds the LOI deadline; the platform organizes the record behind those decisions. To walk through a process on a client you have in mind, request a demo through the Contact page.