By: Samantha Knight
In the world of private equity and business acquisitions, negotiation is often thought of as a numbers game. Buyers and sellers haggle over valuation, debate multiples of earnings, and fight over who will shoulder debt or liabilities. But according to Jeremy Tomes, one of the most overlooked truths in deal-making is that negotiation is just as much about legal structuring as it is about financial positioning. Attorneys are not background figures in this process; they are the negotiators who shape the battlefield itself.
Tomes emphasizes that when buyers or sellers approach an acquisition without strong legal representation, they enter negotiations at a disadvantage. Financial advisors, brokers, and consultants can suggest fair pricing or deal structures, but only attorneys can transform those ideas into enforceable terms. Without enforceable terms, the deal’s value is nothing more than an illusion.
The Attorney as Strategist
Jeremy Tomes describes negotiation as the stage where law and business converge. Financial considerations may establish a starting point, but the legal details determine who really “wins” the deal. For example, two buyers may both agree to purchase a business for $5 million. To an outsider, those deals look identical. But one purchase agreement might give the buyer broad warranties, strong indemnification rights, and favorable dispute resolution terms, while the other might leave the buyer exposed to undisclosed liabilities and limited remedies. On paper, the price is the same. In reality, the first buyer purchased security, while the second buyer purchased risk.
Attorneys, Tomes argues, are the ones who create this security. They know which clauses to negotiate aggressively, which concessions are acceptable, and which protections are non-negotiable. In many cases, they shift the deal’s balance of power without ever changing the headline price.
Key Areas of Negotiation Where Attorneys Make the Difference
1. Representations and Warranties
Sellers naturally want to limit their assurances. Buyers want assurances that the financial statements are accurate, that the company is in compliance with laws, and that there are no hidden liabilities. Attorneys like Tomes push for broad representations and warranties on behalf of their clients, making it harder for sellers to hide behind ambiguity. Narrow warranties may save time in negotiation, but they can cost buyers millions later if hidden issues surface.
2. Indemnification
Even the best warranties are meaningless without strong indemnification clauses. Attorneys negotiate who will be responsible if representations turn out to be false. How long does indemnification last? What is the cap on damages? Will the seller set aside escrow funds to cover potential claims? Tomes explains that these details often matter more than the price itself. A purchase price of $10 million with strong indemnification may be far better than $9 million without protections.
3. Covenants
Covenants are promises about future behavior. Attorneys negotiate non-compete clauses, ensuring that sellers cannot turn around and start a rival business immediately after closing. They negotiate confidentiality agreements, preventing sellers from disclosing sensitive information. They even negotiate employee non-solicitation clauses to stop sellers from poaching staff. Tomes stresses that without strong covenants, a buyer may own a business in name only, while the seller undermines it from the sidelines.
4. Purchase Price Adjustments
Attorneys also negotiate mechanisms that adjust purchase prices post-closing. These can include working capital adjustments, earn-outs based on future performance, or clawbacks if certain conditions are not met. Tomes notes that while financial advisors may model these mechanisms, attorneys are the ones who ensure they are enforceable and drafted with clarity.
5. Dispute Resolution
Finally, attorneys negotiate how future conflicts will be resolved. Will disputes go to court, arbitration, or mediation? Which jurisdiction will govern? What remedies are available? Tomes emphasizes that these clauses are often overlooked until a dispute arises, at which point they become the most important part of the deal. Attorneys know to negotiate them upfront, saving their clients years of costly litigation.
The Subtle Art of Leverage
Tomes explains that negotiation is not just about demands; it is about leverage. Attorneys know how to use findings from due diligence as leverage in negotiations. For instance, if due diligence uncovers a pending lawsuit, the attorney can negotiate stronger indemnification or a reduction in purchase price. If a vendor contract is non-transferable, the attorney can insist that the seller obtain consent before closing. These leverage points are invisible to non-lawyers but make a massive difference in outcomes.
The Danger of Negotiating Without Attorneys
Without legal counsel, buyers and sellers often fixate on price while overlooking the terms that define the deal’s true value. Tomes warns that entrepreneurs who negotiate on their own may believe they “won” by getting the price they wanted, only to realize later that they gave up essential protections. Sellers without attorneys may accidentally over-commit themselves, exposing them to liabilities long after they believed they walked away.
One of the most common mistakes is relying on vague language to avoid tough negotiations. Buyers may accept broad, ambiguous promises from sellers, believing they can sort out disputes later. But Tomes insists that vague promises are unenforceable promises. Attorneys negotiate clarity, ensuring that every obligation is spelled out in black and white.
Attorneys as Deal-Makers, Not Deal-Breakers
Some entrepreneurs fear that attorneys slow down negotiations or make deals harder to close. Tomes challenges this perception. The goal of an attorney is not to kill deals, but to structure them so they last. Deals negotiated without proper legal input often fall apart post-closing, leading to disputes, litigation, or even bankruptcies. Attorneys prevent these implosions by negotiating stability from the start.
In Tomes’ view, attorneys are not deal-breakers; they are deal-makers. By securing enforceable protections, they make deals viable, sustainable, and profitable in the long run. A transaction that collapses in litigation helps no one. A well-negotiated deal creates lasting value for both buyer and seller.
Long-Term Value of Legal Negotiation
Tomes stresses that negotiation is not just about closing the deal; it is about setting the stage for the future. A buyer who negotiates strong warranties and indemnities may avoid millions in future litigation costs. A seller who negotiates clear liability limits may protect their personal assets years after the sale. These long-term protections are invisible in the moment but critical in practice. Attorneys think beyond the closing table, ensuring that their clients are protected for the long haul.
Conclusion
Jeremy Tomes’ philosophy is clear: in business acquisitions, attorneys are not just advisors, they are negotiators who shape the deal’s true value. They fight for broad warranties, strong indemnities, enforceable covenants, and clear dispute resolution mechanisms. They use due diligence as leverage and ensure that every clause has teeth. Without them, buyers and sellers enter negotiations blind, focusing on numbers while ignoring the terms that define whether the deal succeeds or fails.
For anyone considering an acquisition, the lesson is simple: never negotiate without an attorney. Price is important, but terms are everything. With attorneys like Jeremy Tomes at the table, negotiations become not just a fight over numbers, but a carefully structured process that creates lasting security and value.
Learn more about Jeremy Tomes and his work in private equity negotiations at biglawcapitalist.com.
Disclaimer: The content provided in this article is for informational purposes only and should not be considered as legal or financial advice. Success in private equity transactions may vary depending on individual circumstances. Readers are encouraged to seek personalized guidance from qualified professionals for specific concerns related to business acquisitions and negotiations.
