Your choice of legal counsel can make or break the deal.

Negotiating and documenting an M&A transaction for a software company is complex. It requires specialized knowledge and experience. Using a great attorney really doesnt cost more when you consider the potential costs of agreements that dont adequately protect your interests. Selecting an inexperienced attorney could be one of the most costly mistakes of your life.

To start with, the attorney you want on your side is one who
understands the fine points of intellectual property transactions,
knows the appropriate type and scope of representations and warranties,
is able to defend appropriate limitations on the amount and time period for indemnification,
has mastered the legal issues relating to various corporate finance transactions, and
can deal with a myriad of issues relating to securities laws and other regulations to which companies are subject.

But even having the legal knowledge is not enough. Great deal attorneys have other skills that are critically important in their representation of your interests. They have good business sense and understand how to get transactions completed. They are tough negotiators but know how to compromise. They are able to prioritize issues and focus on the ones that are most important. They can fight the legal battles but, more importantly, they know which battles must be won and which ones dont matter as much. They are good project managers and keep on track all the tasks needed to close a transaction.

Legal counsel inexperienced in software M&A transactions can put your transaction in peril and cost you far more than legal fees. They may not appropriately qualify the representations and warranties, and thereby put you in a position of providing guaranties that are much too broad. Or they may permit excessively long survival periods for the reps so that you are open to risks much longer than necessary. Proper parameters for indemnification are critical to limit your exposure to financial loss. It takes experience to correctly dovetail the reps and warranties into the indemnification provisions.

Dont forget that your advisors work for you, not the other way around. Their job is to protect your interests and help you avoid risks, and you should listen to them. But they shouldnt make the decisions for you. Being successful in business means being willing to taking risks. Getting the best out of an M&A transaction also includes taking risks. Let your counsel point out the issues. Decide what risks you can live with. And then move forward. An experienced attorney will help you balance risk and reward to get the best possible transaction. An inexperienced attorney may expose you to the potential for great financial loss, or fight so hard to protect you from every eventuality, however remote, that they end up killing the deal so you get nothing.

A version of this article originally appeared in Soft•letter and Software Success.