Do I Need Both a Lawyer and an Accountant for My M&A Transaction?

Yes. And ideally they should be working together from the start, not in silos.

This is not a question of preference or budget. It is a question of what the transaction actually requires. The legal and tax dimensions of an M&A transaction are deeply interconnected, and the decisions made in one dimension directly affect the other. A lawyer who does not understand the tax consequences of the structure they are negotiating, or an accountant who does not understand the legal mechanics of the deal they are advising on, will cost you more than their fees suggest.

What Your Lawyer Does

Your M&A lawyer manages the legal architecture of the transaction. That means negotiating and finalizing the LOI, structuring the deal, managing due diligence, drafting and negotiating the definitive agreement, and coordinating closing. Your lawyer is responsible for making sure the legal terms of the transaction reflect what you actually agreed to, that the representations and warranties protect you appropriately, and that nothing unravels at the closing table.

A good M&A lawyer also thinks commercially. They know which terms to fight for and which to let go. They understand that the goal is not a perfect agreement; it is a closed deal on terms that protect your interests.

What Your Accountant Does

Your accountant manages the financial and tax dimensions of the transaction. That means reviewing the financial statements, conducting or supporting financial due diligence, advising on the tax structure of the deal, and ensuring that the after-tax proceeds are maximized.

On the sell side, your accountant's most important contribution is often the tax planning that happens years before the transaction. LCGE planning, corporate restructuring, holding company arrangements; none of these can be done at the closing table. They require time, and the accountant who has been working with your business for years is the one best positioned to implement them properly.

A key issue that comes up in M&A transactions is the working capital calculation. This is typically a formula based on current assets and current liabilities, but often requires the seller to leave a certain amount of cash in the business. The correct amount of cash is not based on how much cash the seller usually leaves in the business, but rather, is the amount of monthly operating cash that your business needs to have in it to operate from the date of sale. A good accountant can help a seller determine what the right working capital target should be set at, and will help them figure out the most efficient way to extract any excess cash.

On the buy side, your accountant's most important contribution is the normalization analysis; understanding what the business actually earns when you strip out the seller's personal expenses, one-time items, and owner-specific costs. That analysis directly affects what you should be paying.

Why They Need to Work Together

The structure of a transaction has both legal and tax consequences, and those consequences are inseparable. A share purchase versus an asset purchase is simultaneously a legal decision and a tax decision. An earnout is simultaneously a commercial arrangement and a tax event. A vendor take-back mortgage has legal mechanics and tax treatment that need to be aligned.

When your lawyer and accountant are not talking to each other, gaps appear. The legal documentation reflects one set of assumptions and the tax advice reflects another. Those gaps create problems; sometimes at closing, sometimes years later when CRA comes knocking. Experienced M&A advisors understand that this is a collaborative process, and the only party that loses when the lawyers and the accountant are not working collaboratively is the client. Egos need to be set aside. The only thing that matters is the outcome.

The best transactions we have been involved in are the ones where the legal and tax advisors are aligned from the LOI stage. Both the lawyers and the accountant understand the structure and are in agreement on the tax treatment. The structure is agreed on early, the documentation reflects it, and there are no surprises when the tax returns are filed.

What Makes Outsiders Law Different

One of the core advantages of Outsiders Law's M&A practice is that our team thinks like both lawyers and business people. Sebastian brings nearly two decades of big law-trained tax and transaction experience. He has spent the entirety of his career collaborating with accountants on tax structures. Chace is a lawyer and CPA who came to law from a career in finance and audit. That combination means the legal and financial dimensions of your transaction are considered simultaneously, not sequentially.

We do not replace your accountant. We work alongside them in a way that reduces the gaps, speeds up the process, and produces better outcomes for our clients.

Outsiders Law advises Alberta buyers and sellers on M&A transactions from the first conversation to closing. If you are thinking about buying or selling a business, the best time to talk to us is now.

For more on the M&A process, visit our Mergers & Acquisitions page or our Selling Your Business in Alberta page.

This article is for general informational purposes only and does not constitute legal advice. It does not create a solicitor-client relationship and should not be relied upon as a substitute for advice tailored to your specific transaction or circumstances. If you're navigating the complexities of M&A, remember that the details matter. For expert guidance, feel free to contact Outsiders Law.