Murray (M) at my first rodeo:
Client (C): We need to close this transaction in two weeks.
M: That is impossible.
C: The Vendor said that his lawyer told him that deadline is perfectly reasonable. Why are you creating roadblocks? If you cannot get it done, I will find someone else who is willing to do whatever it takes to get the job done.
M after I had been around awhile:
C: We need to close this transaction in two weeks.
M: Let’s see how we can make this happen. Let’s go through the steps:
- M: I need to draft the purchase agreement. I want the first draft to be as complete as possible. Here is a list of information and documents that I will need from you before I can get started. How soon can you get all of this information to me? C: I will need at least 3 days to pull all of that together.
- M: Ok, when I get your information, I will need about 4 days to get the draft out. Does that sound reasonable? C: Yes.
- M: Once we get the agreement out, I will want you to look at it before I send it to the other side. So that will be 7 days from now. How long do you need to review it? C: I am pretty busy now. I will need at least 3 days.
- M: At the same time as I send it to you, I will want your tax advisor to review it. How fast does she usually move? C: She is not particularly fast. We had better give her at least 5 days.
- M: Once I get comments from you and your tax advisor, I will make any revisions in 1 day and send it to the other side. I know that I will be able to do that quickly because we are going to make that first draft as complete as possible. C: That sounds great, thanks.
- M: Now, we need to leave the other lawyer some time to review the agreement and send it to his client. Experience tells me that they will take at least a week to get back to us, so let’s allow 7 days. C: Yes, that sounds right.
- M: Once we get comments from the other side, you and I will have to review them and then meet and discuss them. I promise to be ready to discuss them in 2 days. How much time will you need? C: I am pretty busy right now, but let’s say 3 days.
- M: Okay, we will try to meet 3 days after we get the comments. Then I will need 1 or 2 days to revise the document. Let’s assume 2 days to be safe, okay? C: That sounds reasonable.
- M: Let’s be optimistic and assume that that we can work out any issues still remaining within 3 days after that. C: That seems pretty quick, but sure.
- M: The Vendor will not want to go to their landlord for consent until they are pretty confident that we have a deal. Your Bank won’t want to deal with this until we have a final form of agreement. How good is your relationship with your Bank and how fast do you think we can get them to move? Keep in mind that it is summer and people may be on holiday. C: We had better leave at least a week for me to deal with the Ban, and that might be ambitious. M: Okay, let’s count one week for both the landlord and the Bank, but we are being optimistic.
- M: I have a pretty good idea of what the Bank will be asking for and how long it will take them. I agree that they should be able to get a commitment letter out to us in a week. We can look at that and finalize it in 1 day unless they surprise us. After that, they will instruct their solicitors. Let’s assume that we will get a document package in 3 days, which would be pretty fast. We will need another 3 days to do our part. C: Okay.
- M: While we are waiting for the landlord and the Bank, I can start on closing documents. I will have them out before the Bank and the Landlord are ready. Then I will send them to the other side. If we are lucky, they will deal with them all while we are getting the landlord and the Bank sorted out, but let’s allow 3 days beyond that to be safe. C: Sounds good.
- M: We will request and review due diligence materials and deal with anything that comes up as quickly as possible. Let’s hope that we can get all of that done without adding any extra days to the process, but you never know… C: I understand.
- M: After that, we will be ready to close, but you can always count on something coming up, so let’s add in another 7 days in case we need them. Does that sound reasonable? C: That makes sense.
- M: If I add all of those time periods together, it totals 56 days. C: Two weeks really is impossible, isn’t it?
- M: Well, yes, it is.
- C: Why would the Vendor’s lawyer say that it can be done in 2 weeks when clearly that is impossible?
- M: Maybe he actually said that and maybe he said something else and the Vendor did not understand. Or maybe he just told his client what he wanted to hear and pushed the ball down the road.
- M: You sound like you know what you are doing. Do your best and it will close when it closes.
And that is how it is done!
This article was originally published by Law360 Canada, part of LexisNexis Canada Inc.