Dealmaking gives Andrew J. Goldberg a thrill he hasn’t found anywhere else.

“For transaction lawyers, this is what we love to do,” says Goldberg, founder and managing partner at the Law Office of Andrew J. Goldberg. “Some people are just built to do M&A deals. At a client level, I love seeing the companies grow and helping the owners pursue their passion and see how far they can take themselves. The ability to be a small part of helping them get that done is gratifying.”

Goldberg has focused his practice on working with entrepreneurs in the lower middle market, serving a variety of industries. Experience has taught him that companies often struggle to coalesce their intentions into a sensible, executable plan.

“When you start looking for acquisitions, there could be a bunch of companies that say, ‘Oh, yeah, I’m interested in selling,’” Goldberg says. “But you’d better be very clear on what you’re looking for, or you can easily get bogged down in evaluating every company under the sun.”

The bottom line is that while there’s a lot to think about, you need to focus on the right details, including the legal components of making a deal. In this Dealmakers feature, we spoke with Goldberg about acquisition strategy and the legal aspects that can influence a transaction’s ultimate outcome.

Consider the why

While dealmaking and private equity investing continue to churn, many business owners remain skittish when it comes to spending money.

“Acquiring a business is, in many cases, more expensive than building up what you need internally,” Goldberg says. “So there had better be a compelling reason why you don’t think you can do what you need to do internally. Ask yourself why you’re doing the deal. Other than saying, ‘I want to be bigger,’ you need to have a clear strategy that makes the case for doing a deal. This is part of the process of addressing a transaction before you get into it.”

As part of the process of executing an acquisition, you should also give serious thought to post-transaction integration. It may seem counterintuitive to do this before you’ve even identified the company you want to buy, but it can make a big difference in how the deal plays out.

“How will the sales and marketing be integrated?” Goldberg says. “How are accounting and finance, operations, IT, HR going to be addressed? How are you going to integrate those systems? Is the buyer going to be responsible for that, or is the seller? How much due diligence have you really done on the company? The post-deal integration is by far the most overlooked aspect in lower middle-market companies.”

Differences matter

Another aspect of dealmaking that is often overlooked is the fact that states have different laws and regulations when it comes to labor and HR policy. It’s much easier to address these issues early in the process when you can still change course, if necessary.

“One of my clients merged with a company in Oregon,” Goldberg says. “Oregon has very different, pro-employee labor and employment laws than in Michigan. Michigan has actually had to adopt the employee laws because we wanted everybody treated the same. We don’t want Michigan employees treated differently than Oregon employees.”

You also need to consider state tax issues.

“Now all of a sudden, instead of just operating in Michigan, if we make this deal, we’re now operating in Oregon, Ohio, Illinois, whatever state it might be,” he says. “So what are the tax filings? After closing, your cost of just running the business may increase.”

Customer agreements are another area to examine.

“You’re going to look at the customers at the company you’re looking to acquire,” Goldberg says. “Who are their customers? What’s their customer relationship, customer concentration? At the end of the day, everything begins with a sale of a product or a service, so you need to know how those customers and sales are going to transfer over to you.”

When it comes to dealmaking, the best course of action is to do a “pre-mortem” on the transaction you’re exploring, Goldberg says.

“In other words, how could how could this end up being a bad deal?” he says. “Think of all of the ways after the closing it can go sideways. A lot of times, that’s a checklist for what you should be doing upfront.”