What a Good Outcome Looks Like, and How to Document It for the Next Client

The five marks of a good outcome

The first mark is that the price was tested. Several qualified buyers submitted IOIs on the same deadline, the owner saw them side by side, and the winning bid was chosen with knowledge of the alternatives. An owner who accepted the only offer received cannot know whether the price was good; an owner who chose among four can.

The second mark is that the structure was understood. The owner can say what portion of the price was cash at close, what the seller note's subordination means, how the earnout is calculated, and what the rollover is worth after the sponsor's preference. The owner was not surprised at closing by anything in the funds flow.

The third mark is that the process held. The IOI deadline was kept, exclusivity was granted for a defined period, and the purchase agreement closed at the LOI price or with adjustments the owner accepted as legitimate. There was no re-trade the owner felt forced to accept.

The fourth mark is that confidentiality held. Employees learned from the owner, customers learned after signing, and no competitor walked away with the customer list.

The fifth mark is that the owner would refer the firm. A satisfied owner may become a referral source when the partner asks at the right time, but that referral is not a guaranteed result of any process.

Measuring against the valuation, not against hope

Owners arrive with a number in mind, and it is usually higher than the market's. The firm that set a valuation range with the owner at the start, with the method and the inputs written down, has a baseline. At closing, the firm compares the result against that baseline rather than against the owner's original hope. Valuation is an estimate built from assumptions, comparisons, and the purpose of the analysis, so the baseline should identify its key inputs and limits [3].

For a client with $4 million of EBITDA whose range at the start was, say, five to six and a half times, a closing at six times with eighty percent cash at close is a good outcome, and the record shows it. The owner who wanted eight times at the first meeting may still wish for more, but the owner can see that the process reached the top half of a range that was set deliberately and that the range was tested by real bidders.

This is why the valuation phase should produce a document, not just a conversation. The inputs (adjusted EBITDA, the add-backs, the comparable transaction multiples, the growth and concentration adjustments) and the range should be in writing and should be the same document the owner saw before launch. A valuation that changes after the fact to match the result proves nothing.

The closing memorandum as a practice asset

Every firm writes a closing memorandum of some kind. For an attorney-run sale, the memorandum should go beyond the closing checklist and describe the process. The document the firm wants, two years later when a similar client walks in, answers these questions: How many buyers were on the initial list and how was it built? How many received the teaser, how many signed NDAs, how many submitted IOIs, how many attended management meetings? What was the range of IOIs and how did the winning bid compare? What structure did the winning bid have and what changed between LOI and purchase agreement? What was the timeline from engagement to close? What went wrong and what the firm would do differently?

The memorandum should also record the owner's decisions and reasons. The owner excluded two competitors from the list for confidentiality; the owner chose a sponsor's bid over a higher strategic bid because of the non-compete; the owner accepted a working capital adjustment of a certain amount after the attorney sized it against the next-best alternative. These entries protect the firm and inform the next engagement.

This document is internal and should be handled consistently with the firm's confidentiality duties and the client's instructions. ABA Model Rule 1.6 generally prohibits revealing information relating to a representation without informed consent and calls for reasonable efforts to prevent unauthorized disclosure [1]. A sanitized version, with the client's identity and figures removed, becomes the firm's case study only after the firm confirms that the proposed disclosure is authorized.

The anonymized case study

Prospective clients ask the same question: have you done this before? A firm that has run one attorney-led sale and documented it can answer with specifics. "We ran a process for a specialty distribution company with EBITDA in the low single-digit millions. We built a list of about sixty buyers from recent closed transactions in the sector, sent the teaser to forty-five, received twenty-two NDAs, five IOIs, and closed with a private equity add-on buyer at a multiple in the upper half of the range we set with the owner, with most of the consideration in cash at close, in about seven months." That paragraph, with the owner's informed consent to the anonymized description and a check that the details cannot reasonably identify the company, is worth more in a new client meeting than any description of the firm's capabilities [1].

The firm should build one of these for each closed process. After three or four, the firm has a track record it can describe by industry, size, and buyer type, which is how prospective clients think about their own situation.

What to show the next client, and what not to

Confidentiality constrains what the firm can show. The closing memorandum is not shared. The anonymized case study is shared only with the former client's informed consent and only in a form that does not identify the company. The firm should not share the former client's CIM, buyer list, or IOIs with anyone, even in redacted form, because the specifics in those documents can identify the company to anyone in the industry.

What the firm can show is its own method: the document request list template, the phase plan with typical durations, the IOI comparison table format, the confidentiality plan template, and the engagement letter structure. These are the firm's work product, and showing them to a prospective client demonstrates that the firm has a process rather than an intention.

Asking the former client for the referral

An owner who had a good outcome may refer the firm if asked. Within a month of closing, once the funds have settled and the owner has had time to reflect, the partner should have a conversation that covers three things: how the owner feels about the result now that it is done, whether the owner would be willing to be described anonymously in the firm's materials, and whether the owner knows other owners who are thinking about the same decision. Owners talk to other owners. The firm that ran a good process can ask the question without implying that a referral is expected.

If the firm has closed a sale in the past year where the firm was involved from the start, write the process memorandum now, while the files and the memory are fresh. If the firm has not, take the next engagement and set up the memorandum's headings at the beginning, so that each phase fills in its section as it happens. The document written at the end from notes taken along the way is accurate; the one reconstructed a year later is not.

How Acquivo Pro fits

Acquivo Pro produces much of the process record as a byproduct of running the process. The valuation is deterministic and traces each figure to its source, so the range set with the owner at the start is the same document at closing. The pipeline records every buyer's progress from teaser through NDA, IOI, data room access, and LOI, so the counts and the timeline are available without reconstruction. The owner's approvals of each disclosure are logged in the branded portal. Software prepares, organizes, matches, and tracks; the attorney and the client decide and act. To walk through a process on a client you have in mind, request a demo through the Contact page.