The Practice of Law

Reflections on M&A, Musical Chairs, and Mental Health

People of my vintage remember playing musical chairs at birthday parties, back before the days when money was so plentiful that it seemed to be important to impress the neighbours by hiring clowns and musicians or renting bouncy castles to entertain five-year-olds.

For those of you who did not have the pleasure of being pushed off of a chair by some mean kid who had fifty pounds on you, the idea was that music would be played while the children would circle a number of chairs that was always one fewer than the number of kids marching around them.

When the adult sadist running the event stopped the music, the youngsters would push and shove each other to claim a chair. That would leave one child crying because they did not secure a place, and they would be ‘out.’ Then one chair would be removed and the ‘game’ would continue until everyone had their chance to be pushed aside and cry. Eventually the largest and most aggressive kid would win.

After I graduated law school, I thought that my musical chair days were long over.  But then I started doing M&A.

M&A is just like playing musical chairs. While the music is playing, everyone works on the deal, but you never know when the music is going to stop. It may stop because the deal is closing, either when it was originally scheduled to close, or more likely following three or four ‘target closing dates,’ or it may stop because someone is walking away from the deal.

When the music stopped, I had to be able to sit comfortably back on my chair, knowing that I had:

  1. done everything that I was supposed to do;
  2. advised everyone involved (the client, other advisors, lenders, associates, law clerks, the other side and third parties) in writing about every item that they needed to do on a timely basis, and followed up with everyone appropriately;
  3. applied for all third-party consents and approvals early in the process; and
  4. managed the client’s expectations throughout.

If the deal was not going to close, I also had to be able to demonstrate that:

  1. it was someone else’s fault and I had done everything necessary to allow my client to hold onto a deposit, sue for damages, recover a deposit, or defend a claim for damages; and
  2. since it was not my fault that the deal was not completed, my bill should be paid.

When I worked on a deal, every day for months, on end, I would have to think about whether the music was likely to stop soon and whether I would be ready if it did, because that is when the finger-pointing would start.

I found that to be stressful.

I did not love M&A work, because it was so stressful. But it was remunerative, and as I got older, I found that I attracted quite a bit of it, in part because my clients were also aging and selling their businesses.  Since I had not yet figured out the bit about prioritizing my mental health, I did my best to do the work and manage the stress.  One thing that I learned was that if you are going to do this type of work, you  need to have a great team.  I always had an Associate keep the checklist of everything that had to be done, and we had a system to keep track of who was doing what, where everything stood, and who had to be followed up with.

I often found myself wondering if other lawyers experienced the same stress doing deals. Eventually I concluded that deal lawyers fall into at least four categories:

  1. those like me who strived to win the game of musical chairs and were stressed because they were doing it right;
  2. those like me who strived to win the game of musical chairs but were more mentally healthy than I was (or am) and could more easily handle the stress. (I should note that I never actually met any of those. I just assume that they are out there);
  3. those who did not have the experience, knowledge, or brains to understand the risks involved in doing the work poorly and just bumbled through; and
  4. those who just did not give a damn.

There is a parallel to all of this in what I consider to be the much simpler business of residential real estate.

When I started practicing law, there was a real estate boom in Ontario. My law firm was closing eighty deals a month. House prices were rising and by the time the closing came around, the house was already worth many more thousands of dollars than it was worth when the agreement of purchase and sale was signed.  If the purchaser’s lawyer  brought up an issue, the vendor’s lawyer would say, “if you don’t want to close, just let us know. Our client will sell it to someone else for more.” Every deal closed. You could be the worst lawyer in the world and your deal would close. 

A year later the market collapsed. Every purchaser wanted out of their deal because the house was worth way less than when the deal was signed. Vendors who had good lawyers could retain the deposit and sue for the deficiency. Vendors who had bad lawyers had no recourse other than to sue their lawyers.

I never did real estate, but I observed what was going on and I learned that good lawyers do every deal as if the music may stop at any time.

As Yoda would say, “stressful, it is.”

And as Murray says, “stressful, it was. I am so very glad to be out of it. Although I do miss the money.”

This article was originally published by Law360 Canada, part of LexisNexis Canada Inc.

Leave a Reply

Your email address will not be published. Required fields are marked *