Ep 317: Legal Due Diligence Mistakes To Avoid When Acquiring An E-commerce Business with Paul Rafelson

If you're buying an e-commerce business, what sort of legal DD do you need to do and understand to make sure you don't take on too much risk? Hi, I'm Jaryd Krause. I'm the host of the Buying Online Businesses podcast and today I'm speaking with Paul Rafelison.

He's an experienced attorney with over 15 years in complex corporate intellectual property, &A, and tax matters. He's also a trusted resource in the e-commerce world, regularly quoted in the news on the issues involving Amazon e-commerce and Paul was also the most cited source of information in the US government's investigation into Amazon's business practices as it pertains to third-party merchants.

Now, before starting a private practice dedicated to the needs of e-commerce businesses, which we dig into in the pod, Paul also spent the majority of his career in-house at some of the largest companies in the world, such as Microsoft, Walmart, and GE, General Electric.

And yeah, in this podcast episode, we talk about e-comm law. What sort of risks do sellers take on? What sort of risks do buyers take on? Where do sellers go wrong when they're selling their business and where do buyers go wrong throughout due diligence when they're acquiring a business?

We also talk about the type of risks that can be seen for a seller and a buyer when you're acquiring an e-commerce business that could either be just e-commerce in general or Amazon sort of business, 80 % revenue from one product with your Amazon business.

What sort of risks are there and how do you protect yourself from that? We also talk about why lawyers cook deals, like just wreck deals and don't sometimes do their clients justice and how you should be questioning lawyers and what sort of lawyers should be looking for in sort of terms of niche dependent or niche specific, I should say when you're acquiring an online business and you need legal DD.

If you guys need referrals and recommendations, let me know. Also, Paul's amazing at this in the Econ world, but this is such a valuable podcast episode. If you don't have my due diligence framework for the taste of guesswork out of buying online businesses, it's free. Thousands of people have used it.

I've used it to help so many people acquire businesses and it saved people millions of dollars and made people millions of dollars. So get that by buying onlinebusiness.com for free resources.

Dive into the pod, you will love it.

Paul, thanks for your time. Thanks for jumping on the pod.

Hey, thanks for having me on. I love jumping on podcasts. One of my favorite things to do because I love to talk.

Yeah, me too. It's one of my favorite things. I love being interviewed. It's also actually quite easy being interviewed when you know a lot about the subject, right?

And it's terrifying when you don't do anything.

Yeah. I don't think I'll do that to myself at all. I'm just away from those. Yeah, man. Legal DD for e-commerce businesses. What I want to chat about today is e-commerce acquisitions. But first, like what's the majority of your business? It's acquisition, M &A, legal DD, but you also do some legal DD, right? Like what does that entail?

Sure.

Yeah, so I started this law practice by accident. Was all due to a blog I wrote all over seven years ago. For most of my life I was in-house. I did a lot of like transactional and tax work for huge companies like Microsoft Walmart and GE. And when I helped GE move to Boston, I kind of walked away and accidentally fell into this space.

I used to be an Amazon seller in full disclosure, but that was 20-odd years ago back when you were flipping DVDs and you had to mail your stuff and do your postage, was crazy. My wife used to work for Amazon Seller Performance. So she, I just from hanging out with her Amazon friends when we lived in Seattle, I learned a lot too from what it was like. The dinner conversation was really good.

So our practice is e-commerce. It is open to pretty much anyone who owns an online business, whether it's an agency, whether it's like a coaching service, but a lot of our clients are e-commerce product sellers. And I would say 70 % of them do a substantial amount of business on Amazon. So we have also developed know-how for how to deal with Amazon-specific issues, basically dealing with the platform.

Created a separate company to sort of parse out that Amazon suspension business, which I don't love, but I've got a great team of people who do love that work and do a great job. And then we sprinkle on the legal.

They have us as a network of lawyers is that there are our firms and others that can sprinkle on the legal when it's needed, but we don't have to be involved when it's not. Now, as far as what companies we deal with, mean, what we deal with, obviously we deal with, our goal is to be a one-stop shop for e-commerce companies. So we are into intellectual property quite a lot. We deal with compliance issues all the time.

But my favorite thing by a mile is the &A aspects, which is helping our clients go through the process of exiting a business or acquiring a business. Whichever one, whichever side, that's sort of my favorite subject. One is because their clients are typically very happy. They're happy to buy into something. It's fun. Yeah. It's stressful, but it's fun.

So it's life-changing. That's what it's about.

It is generational wealth for so many of our clients. And we, yeah, we've done not to brag, but I mean, there was this big aggregator bubble a couple of years ago where Amazon companies, particularly were being acquired left and right by these private equity-backed companies. You may have heard of I know you know these companies, but the audience you may know of Thrasio, Perch, Razor, CellarX.

During that timeframe, we've helped our clients realize over half a billion in proceeds. We're for a small law firm, that's pretty good. Like I'm pretty impressed with what we were able to churn out in terms of helping our clients close these deals. We were really in the thick, 2021 was both the greatest and worst year of my life in terms of what we accomplished what I sacrificed, and what I went through to get through it. Was a lot.

And, that's a little bit died down now. So we're a little bit more normalized. It's not as crazy as it was a wild year. Even 2020 was wild. Then into 2021, all of 2021 was just pretty psycho. 2022 telling off. Just being in the space for over a decade now, seeing it seeing that happen.

And also the effect that those that had with multiples across business models and across different price levels is pretty fascinating actually how it changed the lower tier prices as well, which was tough, really tough for people, just mom and pop investors wanting to get in.

Yeah, there wasn't, it wasn't doable back then. Now we're seeing it. It's like a lot of the deals that we see today, people are using small business administration financing. They're, which people freak out about, but it's pretty reliable. I like it. And I, when I see it, if the buyer's qualified, I quite like it. It's pretty reliable financing compared to some of the other alternatives that are out there.

Yeah, we freak out about things we don't understand. Once you understand SBA, it's like for a business to get approved for an acquisition or a sale with SBA needs to go through some stuff. It's sort of like that itself shows you that the business is decent.

Yeah, exactly. You get a nice affirmation and they rely, they get it done. Know, the banks, want these loans to close very well, it affects how you structure the deal has its impacts, but 2020 was crazy. But 2021 was nothing like I'd ever seen in my life.

And it was just, I didn't think it could get worse into crazy in 2020. should say worse was that 2020 was a lot of fun. Start crazy, but it worked out to be like really interesting time for e-commerce.

I want to ask, let's stick with the thread of A. What are the biggest things that buyers get wrong? Are you 50-50 on the buy side and sell side or is it?

I would say 70, 30 more. We tend to be more seller side, just because it depends on who the buyers are. But yeah, we just tend to know the happy clients. We've seen, I've had clients who were six-figure Amazon sellers in 2017, sell their businesses for $10 million in 2021. mean, that wasn't an uncommon situation. So we had this more relationship with the sellers and certainly with the aggregators.

At that time, just wanted to fuck, we didn't want to rep like we did rep aggregator too at the very beginning and then quickly made the call not to do that because we didn't, one, we didn't want to get boxed out from our clients who were, there were more of them. And two, just felt like big Agra as I called it, they have access to the best lawyers in the world. Like they didn't need us.

And there are not a lot of lawyers that knew Amazon and understood, what was necessary for disclosure, what was necessary for certain contractual terms that we wrote in for specifically, especially Amazon, e-commerce, Amazon. And we felt like we were just better suited on this. So I would say we're still probably more skewed towards the seller side, but we've done plenty of buyer acquisitions.

Yeah, cool. I want to talk about both sides, but first, let's stick with buyers. What are buyers typically, and what do they need to be looking out for, in terms of legal DD, when it comes to acquiring an e-comm brand? Let's just, can, e-comm is pretty open, but let's say Amazon and Amazon, like 90 % Amazon sales or 70 % plus Amazon sales. What are sorts of things?

Yeah, we can do both because we can say, think they go together. And then I think with Amazon, you just layer on an extra thing. You're looking at the product they're selling. Okay. So the most important thing is intellectual property. Do you own it? Right.

Because when you buy, especially if it's an e-commerce product company, right. Or a domain, I've seen this happen where people buy the domains, but they don't own the IP to the actual, they don't own the trademark for the domain, which can raise complications. So to me, the IP is the most important thing as it applies to trademarks.

With Amazon, this is the most important thing because the trademark and the associated goodwill are the value of your company. Mean, that's 90 % of the value. So it's the book value of your inventory plus your goodwill.

Let's just explain that for people, the difference between a domain name and a trademark.

So domain name is just merely the right to own that website, right? We know what it is. Like if I own paulrafelson.com, right, I control what's presented on the website paulrafelson.com. But if there's or maybe let me use lenscap.com, let's go with something a little bit more mundane. Right. So if you own the website lenscap.com, you have the right to sell lens caps, maybe sell anything you want, or make it a blog.

Right.

But the problem arises when you own the domain, but maybe the trademark is not yours. Maybe the product you're selling is already being used by another company that has prior rights to it than you do. Owning the domain doesn't necessarily guarantee you the right to sell the brand name products that you're creating. And that's a common mistake.

Nor does it necessarily guarantee the right to continue business as you're doing it, because somebody may, somebody may have the rights to sell that like for example, if let's say you own the website for this cool domain, but there's a company that's based in the Southeast region, Florida, Georgia, Tennessee, South Carolina, North Carolina, and they have stores and maybe they have a similar domain than you do, but it's got a the in it, right?

And they've been in business for 20 years. You've been in business for two years and why, you know, why you're in that situation. I don't know, but it does happen. They could stop you from selling that circumstance because they would have prior trademark rights to you. It's really important, especially if you're acquiring a domain, that's valuable to evaluate whether you can capture those trademark rights too.

Because if somebody else has the trademark rights, and it doesn't necessarily mean that they have to be before you, typically in the United States and several countries, not Europe, whoever uses the trademark first has the rights to it. But it gets to a point where if you don't make that claim for the trademark rights, you can lose them.

Somebody else who's had them for long enough can say, hey, I have irrefutable rights to this trademark after a certain number of years. So it's really important to not just buy a domain but to understand whether you do control the right to operate the business that's being operated under that trademark. And trademarks, unlike domains, are not broad. They're specific, right? You're in the specific category, right?

So it depends on the category of products you're trying to sell and whether you can obtain the trademark rights. Might be able to obtain the trademark rights for a word in supplements, but you wouldn't be able to obtain those rights if you were selling kitchen appliances or kitchen toys, what do you call it? Kitchen gadgets, right?

Trademark is much more complicated. You're not allowed to squat on trademarks the way, you know, you're not supposed to squat on domains either, but it's much harder to squat on trademarks.

The trademark laws are written to prevent that type of activity. So you can't just go and register a bunch of trademarks and try to extort people the way people do with domains. It's a little more complicated than that. So hopefully that helps a little bit framing.

Just people, when you're buying a business that's selling a certain product, you want the domain name and names. It can help to have multiple names, but also the trademark that can allow you to sell on those multiple domains.

Yeah, exactly. And you want to make sure you want to do so if you're buying this domain and you love this domain, it's got tons of traffic. What you want to know is if it's OK if the seller doesn't have the trademark registered, he may have rights to it. What you're looking for is did somebody else does somebody else has a claim to those rights that prevents you from making that claim later on. Because that's what can hurt you.

Yeah. And, throughout due diligence, you can sort of, you will look at that and see if somebody else has that. And if not, what is it going to cost you, to get that?

If exactly. So IP is important ownership of photos. This is something that I wouldn't say it's huge, but it can be a problem depending on the business model. So if your business model is you incorporate artwork from different websites that you buy a license to the artwork and you incorporate your products, you incorporate on your packaging.

That's a bigger problem than if you just have it if you're just using a stock photo from Shutter stock on your website, you can always change a stock photo, but the problem is that people go on Shutterstock or hire somebody from Fiverr Upwork who then goes on Shutterstock.

You suddenly don't realize what licenses you need or have to operate the business you're running. Where did the photos come from to create your packaging? Where did the photos come from on your website? Do you have the rights? Do you have the rights to any content created by your Fiverr guy?

Did they assign those rights to you? So a diligent evaluation of copyright comes into play as well. And then there are patents, of course, where is the product that, know, if it's a product that, especially if it's a product that's not sold by a major company, like if it's your, you know, person's private label brand, you want to make sure that there are no patents that could potentially prevent you from selling that product in the future. So those are the kinds of the big or when you acquire the business that you acquire the patent as well.

Exactly. Acquiring that patent is one way to go about it, right? And you want to understand the patents that you are acquiring. It goes deep. I'm trying to keep it a little broad, but that is the idea. It's like IP is so much the backbone of most of these e-commerce companies that it tends to be where the focus is.

I would say after IP, then you get into compliance with laws-type issues. So if you're buying a supplement company, you're going to want to hone in on what type of claims are they making. Is this a curative claim? Are they claiming that they cure diseases? Is that why it's selling?

And this is particularly important, just especially for Amazon, because the problem with Amazon is you don't usually get a second chance. So like if somebody reports your product for not being registered with the EPA or not having or having a curative disease claim, you may lose that entire listing. And this is where people don't understand Amazon. It's that.

The listing is sort of like the embodiment of your goodwill. It's that thing that makes your company valuable. Those reviews, that ranking, right? All of that, not so much the account itself. People sort of misconstrue the Amazon account for the listing. The listings are separated from the accounts.

Any Amazon account can host any listing and any person can sell on any listing. In theory, you know, we're not going to get into gating, but it's really important to understand that if something happens to the listing, like if you're hero skew, if the skew that's making your company 80% of your revenue gets taken down. That's a huge problem for the buyer, right?

As a buyer experiences that shortly after acquiring the company, they're going to be ticked off. So as a buyer of an Amazon brand, you want to understand, of course, trademark rights, and IP rights, but you also want to understand the compliance issues that this seller faces to see what type of issues, if they bought reviews, God forbid. You had a case, had a client a couple of years ago, I mean, absolute.

Black hat everything, as they say in the business, every review bought purchased. We just said to them, look, if you want this to come back to bite you, don't disclose. Not the best idea. If you want to cover yourself, disclose it to the buyer. And at that time, the buyers were aggregators. They didn't care. They didn't. They didn't care. They did no due diligence. That's why they paid so much for businesses. That's why the prices of listings went up.

Exactly. Cause they just, weren't doing the due diligence. They were moving quickly. And I used to say, like, don't you guys know there's a due part to due diligence? Like there's the supposed to do it, but that they would do is they would try to push these harsh contracts, get to push harsh reps and warranties to these promises about the condition of your business as a way of sort of saying, well, if anything happens, we can claw back from you and we'll have an easy path to do it, which of course we fought back on that as well, but it was shocking.

Some of the deals we saw were like, I remember one case where we submitted like 700 pages of like all these black things these people did and it was fine. It was no problem. 20 % indemnity cap. I think we had to raise it or something. It was just like more than one occasion where those types of things.

But just as an example, like that, was the crazy of the 2021 era was like that just those buyers were buying anything. They couldn't afford to lose out on a deal because they needed the money. They needed to acquire the brands to get more money out of their funders. It was like a whole sick thing.

So the more brands they acquired, the more valuable they became, and the more the private equity companies would release those funds that they supposedly raised. It was like just a race to close without due diligence as much as possible.

Yeah, it's pretty... pretty crazy why it blew up in their face.

Yeah, it didn't work out right.

Yeah, didn't work out well at all. So just to recap, you've got IP and then you got compliance, making sure that your product is across the board with regulations, I guess, to be able to sell in the States or wherever it's being sold. So that's what needs to be checked. Sorry.

Those are the most important. Those are the hardest things what did the seller do to have the seller get to that position? You want to know the history of that company. There's financial D.D. I can give you examples of financial due diligence mistakes.

For example, sellers use the wrong tariff codes. And so they look way profitable. But then you as the responsible buyer come in and realize that those HCC codes are wrong and your cost of goods sold is going to go up by 20%. Right.

Those are heartbreaking moments, but those things also get missed, right? All the time. So there's there's things to look at in financial due diligence. There's just like fundamental due diligence. Does this guy, is this the guy that owns this company? Right? Like, is this the owner of the company? Do they have the permission to sell it?

But I would say, assuming putting those things aside, financial due diligence, also inventory can be tricky because people account for inventory a lot of times the wrong way. Sometimes that can be bad for the seller or many times have helped sellers save a lot of, know, almost for, I've seen sellers almost lose a lot of money in their deal because they were cash accounting their inventory, which is a big mistake if you're trying to prep your business for sale.

After all, you're telling the person about those inventory purchases that you plan to sell later on. So like a big inventory purchase in July that you're planning to, that's going to stock you up through Christmas.

Right. You're already taking that as an expense. Makes you look unprofitable, but that's not how accounting is supposed to work. It's supposed to accrue. You're supposed to buy the inventory. It's a balance sheet transaction, credit, cash, debit, inventory. It should not affect the PNL. When it affects the PNL, makes your PNL look smaller and you end up getting hosed, which I've seen happen to people, sadly.

You buy the business itself, which is the asset, and then you buy the stock separately. But then you also need to do your due diligence on the stock, which is super important because you don't want to be buying a bunch of stock that is old stock that they haven't been able to push. And you're just buying something that's just depreciating. That's pretty.

Absolutely. That big issue is always the other stock, the aging inventory issue always comes up. Some people like to go to warehouses. They like to count. They like to inspect. Others will just take the three PL's word for it, but they'll impose.

Most of the time in the e-commerce world, I've seen the stock get paid for separately, but there are the deals where you have to understand this difference where if they have a working capital allowance, $1 million of working capital in the form of inventory, well, that means that the first million dollars of your inventory is considered working capital. If you don't have a million dollars of inventory, let's say you have 700, they're going to take 300 off the price.

Sometimes when we talk multiples, it gets confusing because people think, I'm getting a 5X multiple, but it's including a working capital adjustment of a million. It's not really that if you're comparing it to the way other people do this count, which again, I think the working capital way is more common, but in the e-commerce space, I usually see the inventory separately accounted for.

So that's sort of become the way it's done. I think historically in old school &A, it's not usually inventory is part of the deal, but in modern e-commerce, we usually like to say how much is the business worth and then how much is the inventory at landed costs, right?

That's super common in the online business space. Yeah. Pretty normal. Yeah. So that's important for buyers to be checking that sort of stuff. Where do sellers go wrong when they want to list their business?

Go wrong a couple of ways. One is they don't understand the value of their business. So they didn't do the right due diligence. They're like I said, the story about inventory accounting method being wrong.

I mean, that can be a huge problem, right? I mean, if your multiple is three and you took a $400,000 expense for inventory, do the math. That's a $1.2 million mistake, right? You shouldn't have to expense that inventory. You should have gone to your balance sheet until you take it out of the cost consult.

So sellers make that mistake. Sellers make mistakes because they're not prepared. They like, they said a lot of the stuff that we're talking about, IP due diligence, like you should be anticipating this stuff and be ready to address it, be ready to disclose it. Like I always say, I never want to be the person disclosing a new fact to a buyer.

If I'm representing a seller, by the time we're putting our disclosure schedules together and making our notes and saying, you know, there's this problem, here's that thing. We want the buyer to already know.

It shouldn't be any surprises. Sellers just don't really, sometimes when they go to market, they're just not ready for the market and they kind of rush and they don't focus on like, I didn't realize I had this ridiculous IP problem. Like I do incorporate 10,000 images into my products. Did I need to own those licenses? Are those licenses assignable? Do I have to buy them again? It's just, that can be stressful. The other mistake sellers make too is emotion.

This is what I call the going to the beach syndrome. Sometimes when sellers get LOIs, letters of intent, which is sort of the kickoff, they immediately go to the beach and they're just like, you lawyer close it, make it close. And they're not ready to have hard conversations about, where's this deal going? What does the contract say? What do we need to fight for? They're just not in the mood to fight. They're drinking a pina colada in their mind and it's pretty difficult when they've still got a business to run in case that business doesn't get sold.

Well, that's the other mistake. Always say don't do anything different in your business than you would until you close, right? Like run it like as if you weren't selling it. So I think sellers, know, sellers can sometimes be their own worst enemy. Think sellers get the sellers I see that fight for themselves tend to get what they want. The buyers put in the time, energy, and effort.

And if you have multiple offers, I think there's maybe extra confidence. But it's sellers that tend to fight, I find, get what they want more often than not. Whereas sellers that are just like, I'm on a beach. Don't care. Whatever. Just do it. I find it's probably not in their best interest to do it that way, but I mean, they're the boss. We'll explain the risk. We'll, you know, write it down, them a letter or whatever.

Won't, you know, tell them we think you should negotiate this differently, but at the end of the day, they're the boss. We're never. One thing about your lawyer, you have to say is we're not in the driver's seat. We're never going to be. I'm not going to go play chicken with your deal. Right. I'm not going to go like this. You know, my mind will not accept this.

And if you don't take it out, I'm going to shut this whole thing down. Like that's the last thing you want your lawyer to do. Right. You're in charge. It's our job to make sure that the seller is informed, right? That they are making smart informed decisions with a level head. Beyond that, if they want to make a risky decision, like one that would say that this deal is objectively more risky than say what the market-type deals would be.

That's on you. That's okay. This is America. You can do whatever you want. You're allowed to gamble a little bit. If that's on you, that's your decision. As long as you know what you're doing, we're fine with it.

Exactly. That's to me, that's the most important part of our job making sure our clients understand the risk because, to me, that's our job as lawyers when we're representing, especially sellers, and buyers too, but it's my job as a buyer advisor.

Right. Yeah. It's risk management. It's risk allocation. It's risk management. Right. Are we going to put the knowledge qualifier? What's the difference between your rep and warrant that you're complying with all laws versus to your actual knowledge, your rep and warrant your implying laws?

Huge risk difference, and huge risk shifts there. Right. And it's up to the seller to decide how hard they want to negotiate for those particular terms. But the way I like to analogize it is you know, because I love when people say, well, aren't these all just boilerplate? I mean, this is just going to get a boilerplate document.

I'm like, well, to some extent, you're right. It is. It's not that uncommon a document, right? And a purchase agreement, whether it's an asset purchase or share interest purchase, like whatever it is. They're not that they all kind of follow a similar structure, right? Sort of like the difference between a Mac and a PC, but for the most part, it's a hard drive. It's a memory stick. It's a keyboard, right? We get it. The problem is, is where what I say is, but you can look at it this way.

Next time you get on a plane, you look at the cockpit like you're the Boeing 747. One could argue that's a very boilerplate Boeing cockpit, right? But do you know how to work it? And that's the key because every word comma period, semi-colon, like those are like those little switches on the top of the old like.

And if you don't know the right configuration, you could be in for a lot of trouble. And that's our job is like we're negotiating that configuration to get the risk just right as far as close to right as possible.

That's kind of how I view it. I try to sort of explain to people that four plates, are not the problem. It's like, do you know what this stuff means though? And Matt, cause it all matters. It's just, you know, and to some degree, it is like a prenup in a way.

There's another way to look at it. It's like negotiating a prenup Like you hope to just take this piece of paper, put it in a drawer, and never deal with it again. But, if there's a dispute in the future, this is what governs. Yeah.

Yeah.

That's a good way to look at it is I've done a, and I wouldn't recommend this, but I've brought a partner into my business and we went to get agreements made up on both sides and both lawyers on either side were just too heavy on each other's side.

And we're just like, we know what we both want. We both agreed on this and we just went forward anyway. And we never ended up having to revert to an agreement and it all ended amicably and all that sort of stuff. And I don't suggest that, but the most important thing is to agree together and it's, and to have that on paper is great, but you hope you never need it.

I think you're also a victim of a bad lawyer. I mean, I think that's a type of analysis paralysis, learning that kills people. And that's where I come back to. And I've learned this over the years as a private, you know, because as a corporate attorney, when you're working for huge companies, you're on a team of thousand lawyers, know, inside council, outside council, their council, and everything's a problem. Everything's huge.

Yeah, everything's every yeah.

Every decision is a massive mess. But if you do that to your small business clients, you're killing them and you don't understand what got to work with.

So that's so many deals in absolutely eight like eight figured and below deals. They get killed by lawyers so often and it's just why I tell my clients, I'm not going to do that. I'm not going to kill you. I'm going to explain it to you. I might be harsh to you offline. I might say, hey, dude, this is crazy.

This is nuts. This is, know, or don't tell me. But to some degree, that's what lawyers worry about. And I don't think they handle it right. Lawyers are afraid to concede because they're imagining all of these possibilities and they can't reconcile how to help their client manager. They shouldn't be practicing this type of law.

Right. I always say to my clients, I'm very good at telling you what's possible. I'm not very good at telling you what's probable because I don't have a crystal ball. Right. So I can tell you a million different things are possible, but to some degree, we have to get back to reality and say, okay, what can we live with? What can we accept risk on? What can we do? Yeah, that's possible. But are we that concerned? Will we just have to deal with it if it comes up? Cause we can't, nothing will ever get done.

And if the situation like you described, and I think it's a, it's a skill. And I think it's something that I've learned over the years to manage. Yeah, when I do for partnership agreements, I have no problem being neutral on those. I prefer it that way for a partnership agreement. Can't do it for M &A, but for partnership agreements, like we get two people coming to us and saying, we want to start a business.

Yeah, I'd like, you guys, I'm happy to be neutral here. I'm like, you're you each can go get your lawyer if you want. But if you just tell me what you want, we'll make it. We won't take we're not going to play favorites. Just going to put together your partnership agreement and I will explain to you what everything means they typically can be a lot less at risk in a partnership agreement when something is starting versus an acquisition anyway.

Let's be honest like you just want a lawyer that's going to be able to understand the risks and work out a way that you can minimize your risk, but still meet the other side and come to an agreement, not just be too heavy and just keep charging an hourly rate and be too heavy and just be a dick about it.

Exactly.

No, absolutely. Or God forbid those law firms that, and this is why I think something we do, being focused on IP, like am I the best IP lawyer on the planet? No, there are IP lawyers who are going to run circles about me. Am I very good at the IP that most of my clients need help with?

Yes. I'm 99 % there for you, I'm not the lawyer you're going to go to if you're designing the next rocket fuel. That's not me. Okay. But if you're selling the world's 15th-best-ranked avocado slicer on Amazon. We're good. I got you. You know, I can handle it and it's good because you don't.

What happens is and you see this too with big buyers, even if they're buying small companies, they're so risk averse. They'll hire the same law firms. And I've seen this happen with the aggregators sometimes. I'm like, oh guys, I work with you at Microsoft. What are you doing here? Like, why are you here? This is like your question. Your bill is going to be more than this deal. Right. And then you get these meetings.

The Salic Lawyer is so niche-specific.

Exactly. At 15 lawyers in the room and you got the IP guy and the &A guy and the compliance guy and they're billy, all 15 of those lawyers are sitting in the meeting. It's like me and maybe my associate and we're in all 15 of those lawyers who are billing all six. What are we doing here? But yeah, it is. You need a lawyer that's kind of savvy can work with you that understands the market they're in and who they serve. And I think that's important.

Yeah, spot on. It's been so good to have you on Paul. Thank you so much for coming on. I feel like we need more time. We both running out of time on this call, but I feel like we might have to do another one. It's many more questions that I have.

As your viewers know, I love to talk.

Yeah, me too. Me too. Yeah, we'll do another one. I'm sure this was valuable for the audience and I'm sure they're going to love it. So they'll want to have you back on for sure. We'll see up something again, everybody to have Paul back on. Like we were pretty broad today and I think it was just super valuable in the sense of like, what sort of legal DD do you need to understand coming into an acquisition on the sell side and the buy side? And then also kind of like how to choose a lawyer really and why go niche specific?

Yeah. Paul.

Anything else to quickly share before we wrap up?

Doug, just thank you for having me on everybody and have fun out there and let's keep these deals going. It's the markets, it's bouncing back and it's a great time to be a buyer and it's a great time to be a seller. So let's keep the deal flow flowing and steel on the flip side. And I don't have a good, you know, I have a good out punch, the punch out thing, but that was corny as heck, but okay. But no, thank you so much.

We'll take it, Paul. Yeah, no, like a great time to be in the market, both the buy side and the sell side. And thanks, Paul. Thanks, everybody. And looking forward to another one in the future.

Cheers, man. Thanks so much.

Thank you.