Scoping the Engagement to Cover the Sale Process, Not Just the Documents

What the traditional scope leaves out

Most corporate engagement letters for a sale describe the work in terms of documents: review the LOI, negotiate the purchase agreement, prepare disclosure schedules, handle ancillary agreements, and close. That scope assumes someone else has already found the buyer, set the price range, and decided the structure. By the time the attorney is engaged under that scope, the most consequential decisions in the transaction may already have been made without legal input.

Consider what happened before the attorney arrived. The client decided which buyers to talk to, or more often talked to the one buyer who called. The client shared financial statements, customer lists, and sometimes employee information without a signed NDA or with a buyer-drafted one. The client accepted a headline price without knowing whether it was competitive. The client agreed to an exclusivity period that removed alternatives. The attorney then negotiates the purchase agreement from inside that box.

A scope limited to documents also limits the firm’s economics. The purchase agreement is the largest single document in the transaction, but it is a fraction of the total work a sale requires. The readiness review, the valuation discussion, the drafting and editing of the CIM, the buyer list, the NDA flow, and the IOI comparison are all work. Under a documents-only scope, that work either goes to a banker, goes undone, or gets done informally by the attorney without being billed or described.

The six phases as the scoping frame

A clean way to scope a process engagement is to describe the six phases and state which ones the firm is taking on. For a client considering a sale in the $5 million to $100 million enterprise-value range, the answer may be all six, but naming them lets the partner and the client agree on the boundaries.

Discovery and readiness covers the intake questionnaire, the initial document request, corporate cleanup, and a candid review of what a buyer will find. Valuation covers the range the client should expect and the assumptions behind it. Marketing materials covers the teaser and the CIM. Buyer matching and outreach covers the prospect list, the client’s review of that list, and the initial contact. Offers covers the NDA, the data room, and the IOI deadline. Negotiation through close covers the LOI, exclusivity, diligence, the purchase agreement, and closing.

When the engagement letter names each phase, three things improve. The client understands that the firm is running a process and not waiting for a buyer to appear. The associate and paralegal know what work is expected in each phase and can staff it. The firm can also price each phase separately if it chooses to, which the next article in this series addresses.

Decisions the scope should assign to the client

A process scope should be explicit about who decides what. The attorney organizes, prepares, and advises. The client decides. This is not only a regulatory posture, though it matters there. It is also how a well-run sale works. The owner knows which competitors must never see the book, which employees are a flight risk, and what price would make the transaction worth doing.

The scope should state that the client approves the buyer list before any outreach, approves every disclosure before it leaves the data room, selects which IOIs advance, and chooses the counterparty for the LOI. The attorney prepares the materials, presents the comparison, and explains the implications of each choice. The firm should confirm with its own counsel how the federal M&A broker exemption and applicable state rules apply to the activities it takes on and the fees it charges. Federal materials describe an exemption with specific conditions and excluded activities, and the SEC has stated that its staff position does not resolve other federal or state-law questions. [1] [2] Software prepares, organizes, matches, and tracks; the attorney and the client decide and act.

What stays outside the scope

A process scope is broad, but it should not be unlimited. Several items belong outside it, or in a separate engagement, and saying so protects both the firm and the client.

Tax structuring advice beyond the attorney’s practice should be referred to the client’s CPA or a tax specialist, with the attorney coordinating. Wealth planning after the sale belongs to the client’s financial advisor. Quality of earnings work, if a buyer requests it or the client wants it before launch, is an accounting engagement. Employment and benefits questions that arise in diligence may be in scope if the firm has that capability and out of scope if it does not.

The scope should also address what happens if the client receives an unsolicited offer during the process, if the client decides to pause, and if the client wants to bring in a banker partway through. Each of these is common enough that the engagement letter should anticipate it rather than leaving the firm to improvise.

The scoping conversation this week

If you have a client who has mentioned selling, the scoping conversation can happen now. Ask the client to describe what they expect to happen between today and a closing. Most owners will describe two or three steps: find a buyer, agree on a price, sign the papers. Then walk them through the six phases and ask which ones they assumed someone else would handle.

That conversation surfaces the gap between what the client expects and what a competitive sale requires. It also shows the client that the firm has a method. From there, drafting the scope section of the engagement letter is a matter of listing the phases, assigning the decisions, and stating the exclusions. A partner can do that in an afternoon with a template built once and reused.

How Acquivo Pro fits

Acquivo Pro organizes the firm’s work around the same six phases a process engagement describes: discovery and readiness, valuation, marketing materials, buyer matching and outreach, offers, and negotiation through close. The platform reads the client questionnaire, the data room, and the company website, generates the teaser and CIM, builds a prospect list from a buyer database organized around documented acquisition criteria, and tracks NDA, IOI, and LOI flow for every client in one pipeline. The client works in a branded portal under the firm’s name. To walk through a process on a client you have in mind, request a demo through the Contact page.