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When Washington business owners embark on an acquisition, they often view their professional advisors as operating in silos: the lawyer handles the “legal paperwork” and the accountant handles the “numbers.” In reality, the quality of the outcome depends on these two roles working together. A lawyer can draft the strongest indemnity clause imaginable, but it is toothless if the accountant hasn’t first identified the financial landmines it needs to address.
This post focuses on how buyers can leverage their legal and financial teams to ensure that what you think you’re buying is actually what shows up on closing day.
1. Translating “Accounting Reality” into “Legal Protection”
The most critical point of collaboration occurs when drafting representations and warranties. As your lawyer, I might ask the seller to represent that their financial statements are “prepared in accordance with GAAP.” However, your accountant is the one who determines whether the seller actually uses GAAP or relies on a cash‑basis method common in many Washington small businesses.
The Accountant’s Role: Identify the seller’s non‑standard accounting practices, such as how they record deposits, recognize revenue, or handle customer prepayments.
The Lawyer’s Role: Draft and negotiate targeted, non‑boilerplate representations that force the seller to disclose those exact risks, creating a clear path for recovery if the numbers later prove inaccurate.
2. Defining the Working Capital Battlefield
Working capital is one of the most common sources of post‑closing friction. If the definition in the purchase agreement is too broad, the seller may “strip” the company of cash, inventory, or other current assets just before closing.
The Accountant’s Role: Determine the “base” or “target” working capital required to run the business day‑to‑day based on historical cycles.
The Lawyer’s Role: A working capital peg is the agreed upon target level of net working capital the seller must deliver at closing. It represents the normal amount of operating fuel in the tank that the business needs to run day to day. The purchase agreement then uses that peg to drive an automatic price adjustment if the company shows up at closing with more or less working capital than expected.
3. Due Diligence as a Feedback Loop
Diligence should not be a one‑way street. . When my legal team reviews a contract, for example, an equipment lease with an upcoming balloon payment or a customer contract with aggressive volume discounts, we may need to flag it for an accountant.
The Lawyer’s Role: Identify legal obligations, hidden liabilities, or change‑of‑control issues that could affect the business after the sale.
The Accountant’s Role: Model how those obligations affect cash flow, EBITDA, and the long‑term financial viability of the company—not just the purchase‑price multiple.
The Takeaway for Washington Buyers
Your goal is to avoid surprises after the papers are signed. When your lawyer and accountant are communicating, the legal terms in the contract stop feeling like fine print and start functioning as a real safety net for your investment. Effective collaboration ensures that the legal protections you negotiate align with the financial reality your accountant sees on the ground.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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