Closing Remarks Podcast: Doug Starcher on Simplifying M&A Legal Terms

The most important parts of a business sale often aren’t found in the purchase price; they’re hidden in the legal language of the deal.

In this episode of Closing Remarks, host Dara Shareef sits down with Doug Starcher, a Managing Partner at Nelson Mullins, to break down the legal terms that every business owner should understand before selling a company.

With more than 35 years of M&A experience, Doug explains everything from Letters of Intent (LOIs) and purchase agreements to representations and warranties, indemnification, disclosure schedules, working capital, and deal structure. Whether you’re preparing for an exit or want to understand the M&A process better, this episode provides practical guidance to help you protect the value you’ve built.

Key Highlights

• Why the Letter of Intent (LOI) sets the foundation for a transaction
• The role of an experienced M&A attorney throughout the deal process
• How representations and warranties help buyers understand a business
• Why indemnification and disclosure schedules matter after closing
• The importance of working capital and transaction structure
• Why assembling an experienced deal team can help protect value

Why the Letter of Intent Matters

The Letter of Intent (LOI) is often the first major milestone after an offer is accepted. While the LOI is not the actual purchase agreement, it does set the framework for the transaction, including the purchase price, deal structure, timeframe, and other key business terms.

As Doug states, “The LOI gives direction but does not get mired in legalities.” Most of the more complex legal provisions are better negotiated after due diligence, once both parties have a clearer understanding of the business and its risks.

Understanding the Language of M&A

Among the greatest obstacles faced by business owners is understanding the language used throughout the whole M&A transaction.

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Doug and Dara break down the legal terminology often seen in acquisition agreements and explain what these terms mean in an easy-to-understand way. One of Doug’s most memorable analogies compares representations and warranties to painting a picture of the business.

Buyers agree on a certain price after seeing the picture that is presented. The purchase agreement then asks the seller to confirm that the picture is accurate, giving buyers confidence that the business they’re acquiring matches what they’ve been told.

More than Drafting Documents

An experienced M&A attorney does more than prepare legal documents. Doug describes the role as both a protector and translator, helping business owners understand the implications behind legal provisions while coordinating with tax attorneys, employment specialists, and other experts when specialized knowledge is needed.

The episode also highlights the importance of collaboration between an M&A attorney and an investment banker. When advisors understand their respective roles and work together throughout the process, business owners benefit from better communication, smoother negotiations, and stronger outcomes.

Choosing the Right M&A Attorneys

Doug encourages business owners to ask prospective attorneys how many M&A transactions they handle each year because experience matters. He also recommends asking whether the attorney has access to specialists, because even the most seasoned M&A attorney rarely works alone.

Instead, they coordinate with specialists across multiple disciplines, including employment law, tax, intellectual property, privacy, employee benefits, and corporate governance, rather than trying to be experts in everything. Experienced deal attorneys know when to bring in specialists while keeping the transaction moving efficiently.

Building the Right Advisory Team

Another recurring theme throughout the episode is the significance of assembling an experienced advisory and deal team.

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Investment bankers, M&A attorneys, tax experts, and accountants are just some of the advisors who bring unique expertise to the transaction. They assist business owners in evaluating offers, conducting due diligence, negotiating agreements, and ensuring the deal delivers on its promises.

Building the right advisory team is not just about closing the deal; it is about protecting the value of everything a business owner has worked to build.

Understanding Indemnification

Indemnification is the provision that gives the buyer the right to seek compensation if any representation is found to be inaccurate after closing. It defines how long the seller remains responsible, the amount that can be claimed, which claims qualify, and the process for resolving disputes.

All these terms are among the most heavily negotiated sections of an acquisition agreement because they determine how risk is allocated after closing.

Disclosure Schedules

Representations rarely stand alone. Sellers prepare disclosure schedules that identify any exception to the representations. For example, the purchase agreement may contain a statement such as, “The company has no pending litigation.”

If there is pending litigation, the disclosure schedule identifies it. The purpose is not to create problems, but to protect the seller. Proper disclosure helps reduce the risk of post-closing disputes by ensuring buyers understand known issues before the transaction closes.

Working Capital: Buying a Business That’s Ready to Operate

Another area that frequently catches first-time sellers off guard is working capital. Buyers aren’t simply purchasing assets. They’re purchasing an operating business. That means they expect sufficient accounts receivable, accounts payable, inventory, and operating cash flow to continue running the company immediately after closing.

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If significantly less working capital is delivered than anticipated, a purchase price adjustment may reduce the seller’s proceeds. Whereas if there is substantially more working capital than necessary, then the seller may receive an increase in the purchase price.

Asset Sales vs. Equity Sales

The legal structure of a transaction has major tax implications. With asset sales, the buyer acquires specific assets of the business. In many cases, this results in different tax treatment depending on the type of asset involved.

In an equity sale, the buyer acquires ownership interest in the company itself. Depending on the entity structure, this transaction may produce significantly different tax consequences for the seller.

Protecting What You've Built

The sale of a business is the biggest financial transaction a business owner will ever make. As noted by Doug Starcher, success isn’t just about negotiating the price; it’s about understanding the legal language that shapes the deal and surrounding yourself with advisors who do this every day.

His closing advice is quite clear: don’t fumble the ball on the one-yard line. Having put many years of effort into building up the company and achieving success, the final stages of a transaction are not the time to cut corners. By having the right deal team and a clear understanding of the process, business owners can approach a sale with greater confidence and protect the value and legacy they’ve worked so hard to build.

Where to Watch

Want to learn more? Watch the full episode as host Dara Shareef and Doug Starcher share practical insights on the Letter of Intent (LOI), representations and warranties, indemnification, disclosure schedules, working capital adjustments, transaction structure, and the legal strategies that help business owners protect value throughout the M&A process.

The episode of Closing Remarks is available on Spotify, Amazon Music, Apple Podcasts, and YouTube.

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