Hal Stanton

Lawyer | Helping entrepreneurs buy, grow, and sell main street businesses | Building a modern law firm at 7th Street Legal, PLLC

[Hal Stanton @HallamStanton]

I see lots of people introduce themselves on X.

You know the post: “I see that I have a few more followers. . . .”

Yet introducing myself has always terrified me.

Let’s be honest: Putting yourself out there can be challenging.

At first, it feels cringy, particularly if you are British (we Brits don’t do self-promotion).

So the idea of starting to post regularly AND introduce myself made me sweat.

Instead, I just started posting, twice a week at first, now daily.

That was a little over a year ago. And in that time, I’ve come to embrace my X presence.

Apparently starting is the hardest thing. Who knew?

So here goes:

I’m a lawyer, and I write about the legal side of buying Small-Medium Businesses, both here and on my blog SMB-Transactions[.]com.

If you’re interested in buying or selling SMBs, in whatever capacity, I would love to hear from you. Please reach out. Let’s connect.

And if you want to work together, great!

I represent searchers and sponsors looking to buy businesses between $1MM-10MM. You can contact me at [email protected].

I’m looking forward to meeting you, and better understanding how I can help.

[Hal Stanton @HallamStanton]

𝗜𝘁 𝗵𝗮𝗽𝗽𝗲𝗻𝗲𝗱 𝘃𝗲𝗿𝘆 ��𝗹𝗼𝘄𝗹𝘆 𝗮𝗻𝗱 𝘁𝗵𝗲𝗻 𝗮𝗹𝗹 𝗮𝘁 𝗼𝗻𝗰𝗲.

I went from busy to barely hanging on.

All non-essential deal work had to stop.

No social media, no blogging, no business development.

Weekends left in ruins. An understanding family left to pick up the slack.

But I've crested the peak. And I'm slowly getting back on track.

So with the 4th of July around the corner, I thought I would reflect.

Some take aways from the past month:

1. Scaling an M&A law practice is hard.

Building out a team and delegating work is one thing. But there is a difference between delegating work and having someone else run a deal.

The former leaves you still spinning plates. And plate spinning is hard work (when you have enough plates in the air).

2. Systems and processes are meaningless until they have been battle tested.

We have systems and processes at Groundswell. But when things got really crunchy, they started to fall apart.

To some extent, this is because we are building the plane as we fly it. We've been taking on additional team members as deal flow has ramped up this year.

But as the team evolves, our way of working has to evolve too. And we're still figuring that out.

3. Be careful what you wish for.

I started building my own book of business a couple of years ago.

If you had told me then that I would be turning clients away because I couldn't realistically fit them into my schedule, I would have said great!

But the reality is that the past month has felt like my old corporate jobs: A grind.

And Groundswell was never meant to be a grind.

I guess that means I have more work to do to address points 1 and 2 above.

Are you trying to grow a service based business? I would love to hear from you.

What challenges are you running into? How have you solved them?

[Hal Stanton @HallamStanton]

@BobPritchett @SAOliver_Atty This is still widespread legal practice. Someone please make it stop!

[Hal Stanton @HallamStanton]

Why do people, particularly lawyers, put two spaces after a period? That should have stopped after the dark ages (or at least since Windows 95). Ask anyone involved in publishing.

[Hal Stanton @HallamStanton]

@jennyrozelle @SAOliver_Atty Big law firms still have their associates do this. I have no idea why. To generate billable hours?

[Hal Stanton @HallamStanton]

@SellersCounsel I learned double spacing after periods too. It's just a kick back to the days of typewriters. For some reasons, law firms still have associates do this...

[Hal Stanton @HallamStanton]

Representations are only as useful as your ability to recover.

If there's a specific risk (like warranty exposure), you might want to consider an escrow or holdback.

Tie a portion of the seller financing to KPIs to hedge against post-acquisition performance.

[Hal Stanton @HallamStanton]

The modern rule is that remedies are cumulative unless the agreement states otherwise.

So the seller has to push for exclusive remedies. He or she can’t stay silent.

But then why include cumulative remedies provisions?

What can I say? Lawyers love inefficiency.

[Hal Stanton @HallamStanton]

Letters of intent are largely non-binding documents.

But that means that LOIs are binding in part...

· Termination
· Governing law
· Confidentiality

… to name a few.

[Hal Stanton @HallamStanton]

Purchasing a business is a large financial commitment.

How do you protect that sort of investment?

You get the seller to indemnify you for losses arising from the breach of a representation.

And, importantly, you back that indemnity with teeth: Escrow, offset, whatever.

[Hal Stanton @HallamStanton]

@CIMbuilder Why doesn't the rest of the world?

[Hal Stanton @HallamStanton]

@ClintFiore Clint, can you help me? I want to receive a basic income of approximately $100,000 a year, no strings attached. What can you do for me?

[Hal Stanton @HallamStanton]

Your LOI needs to beat out the competition.

But make sure you structure your offer wisely.

One example: 100% cash at close is the seller's ideal.

But that’s not your ideal—It leaves you completely exposed.

[Ryan Ray 🦏 @ryanraysr]

Last year, I hit a wall.

My body told me to stop, even while my business was doing fine.

Doctors think it’s MS. I had to slow everything down, even the work I loved most.

I’m doing much better now.

Energy’s back. Focus is back. And I’m building again.

If you’ve followed me for a while and want to know what I’m building or how I can help you keep reading.👇

[Hal Stanton @HallamStanton]

One of the earliest (and most fundamental) decisions you'll make when evaluating an acquisition:

Do I buy assets, or do I buy stock?

[Hal Stanton @HallamStanton]

When buying a business, have you ever hit the "form or bust" scenario?

You’ve found the right business. You’ve executed an LOI. But then…

The broker insists on a form purchase agreement, signed before diligence.

Ouch.

[Hal Stanton @HallamStanton]

@kevindmonaghan 👏Great comment.

[Hal Stanton @HallamStanton]

When it comes to key employee risk, you have two options: the carrot or the stick.

Carrots come in many different varietals (salary, bonuses, benefits, equity).

And as for the stick? The non-compete.

But remember that no one likes working under the threat of a stick.

[Hal Stanton @HallamStanton]

A signed purchase agreement is the destination.

But the business buying journey begins earlier.

Signing a LOI is a crucial first step on the road to owning a business.

So don’t treat the LOI as a box ticking exercise.

Seek guidance as needed (from mentors or advisors).

[Hal Stanton @HallamStanton]

In the context of M&A, sandbagging is where you claim for a breach of a representation, despite knowing that the representation was untrue when signing.

Is it allowed? It depends.

Make sure your lawyer includes a “pro-sandbagging” provision in the purchase agreement.

[Hal Stanton @HallamStanton]

When buying a business, you can't afford to get working capital wrong.

If you have insufficient working capital at close, you may even to inject additional capital to fund operations (or face insolvency).

Start discussing working capital with the seller early in the process.

[Hal Stanton @HallamStanton]

I still have one client who is pushing for an end of the month loan number (due to the SBA SOP changes).

Yet the biggest hold up right now is the seller’s attorney.

There is no sense of urgency.

Given the timeline, taking more than a week to turn comments to a purchase agreement is unacceptable.