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An advisor’s role in transactions

Bartosz MIŁASZEWSKI
Managing Partner RSM Poland

Since I started providing transaction services, in other words advising Clients in purchase and sales transactions as well as enterprise mergers and acquisitions, one question has been constantly on my mind: what is truly an advisor’s role in a transaction? What is my role and what is the role of the other party’s advisor? The answer is pretty clear if a Client commissions RSM to sell their company or to buy one – in such situation, our role is limited to negotiating best price and securing the Client’s interests in agreements. All the actions taken are to satisfy the highest imperative goal „I want to sell” or „ I want to buy”. However, sometimes the imperative “I want to sell/buy” is not as strong as the mentioned “want”. We often hear our Clients saying “I could” and not “I must”, “I would like” and not “I want to”.

The question of the advisor’s role in a transaction came back to me during one of my latest projects, once the person providing advice to the other party, in the so called backroom conversation, unceremoniously said: “Mr. Bartosz, after all, we both want this transaction to be completed”. I responded rather blankly: “Yes, we do, but on terms favourable to my client”. For me “this transaction” did not necessarily mean the transaction with the buyer with whom I was then negotiating. In the described project the Client commissioned me to protect his interests and defined this protection in the following way: „Yes, I do want to materialize this transaction but on the terms I expect, and not at all costs. If the other party does not want to accept terms that I find favourable – count me out”. “I can” go in but “I don’t have to” since my business is going well and I am satisfied with what I have. Therefore, do I – the transaction advisor – care so much about the successful completion of this particular transaction? It is quite hard to give one clear answer.

Many times, when carrying out various transactions, I met the other party’s advisors (I intentionally do not use term „counterparty”) who behaved in such a way - unduly emphasizing each and every provision of the agreement – that the atmosphere between the parties, who had almost made a deal, became tense and, eventually, the transaction was not completed at all, or its completion was significantly delayed. Not trying to diminish a worthy profession, but this attitude is the domain of advisors-lawyers. Maybe their mandators did not care about the transaction so much? Maybe they “could” but “did not have to?”? This is a likely scenario, but, to my mind, in many of the cases, advisors just did not understand their role properly and, by unconsciously caricaturing it, led to exacerbation of relations between negotiating parties.

I believe that transaction advisory should not be aimed at completing or not completing a given transaction. Our (advisors’) role is to represent our Client’s interests in the best possible way. Clients are usually able to define their aims achievable through the transaction. Still, we – advisors – are often asked: What do you think I can achieve? How much can I get? How much should I pay? What terms could/should we agree on? And so on…

The transaction advisors’ task is, first and foremost, to understand their Clients, to know what they expect from and want to achieve through the transaction, as well as to protect and then represent their interests, so that the result of negotiations is as favourable as possible.

Advisors, like actors – have to understand their role, emphatize very well with this role and „act” in the way their Client, the director of this play, expects them to act.