Mergers & Acquisitions

Most M&A deals that fall apart don’t fall apart over price. They fall apart over what’s discovered in due diligence – a tax exposure no one knew about, a customer concentration that scares the buyer, an employment agreement that locks in a key person the seller assumed would walk, a working-capital adjustment that nobody modeled. Price is what the term sheet talks about. Everything that determines whether the deal actually closes, and whether the seller actually keeps what they thought they were getting, is somewhere else.

I’m Lawrence Israeloff. I’ve been representing buyers and sellers in private-company M&A on Long Island and in New York City for over two decades, both as a business attorney and as a CPA. The dual credential matters here more than it does in almost any other area of practice, because the legal structure of a deal and its tax consequences are decided in the same room and need to be evaluated together. When the lawyer and the accountant are different people on different sides of an email thread, deals lose money to coordination failures that shouldn’t happen.

Where the value gets made or lost

A few places where the work I do tends to materially change the outcome:

  • Asset versus stock. This is the first real fork in the road on most deals, and it usually pits the buyer’s interests directly against the seller’s. Buyers generally want assets – they get a stepped-up basis, they pick the liabilities they assume, and they avoid inheriting unknown exposures. Sellers generally want stock – single layer of tax, cleaner exit, no separate negotiations over what conveys. Neither side gets everything it wants, and the gap between the two structures is often worth real money. There are also middle-ground options, §338(h)(10) and §336(e) elections that treat a stock sale as an asset sale for tax purposes, that can bridge the difference if the entity type cooperates.
  • Earn-outs and installment treatment. A meaningful portion of the purchase price is often deferred, contingent, or seller-financed. How that’s structured determines whether the seller can use installment-sale reporting under IRC §453, whether the contingent piece is treated as additional purchase price (capital gain) or as compensation (ordinary income, plus payroll taxes), and what happens if the buyer’s business deteriorates after closing. I’ve seen sellers lose six-figure tax differences on this point alone.
  • Section 1202 qualified small business stock. For sellers of C-corporation stock that qualifies, §1202 can exclude up to 100 percent of gain on the sale, subject to a per-issuer cap. Whether stock qualifies depends on the corporation’s history, its asset composition, the holding period, and how the original shares were issued. This is something to confirm well before a deal (sometimes years before) because there’s no way to retroactively make non-qualifying stock qualify.
  • Working capital and indemnity. Two of the most heavily negotiated parts of any purchase agreement, and two of the most likely places for unpleasant post-closing surprises. The working-capital target needs to be set against a real reference period, with clear definitions of what’s included; the indemnification provisions need realistic caps, baskets, and survival periods that match the actual risk profile of the business. Templated provisions copied from another deal are where money disappears.
  • Reps and warranties insurance. R&W insurance has changed how middle-market deals get done – it’s no longer reserved for transactions in the nine figures. For deals at the right size and risk profile, it can replace traditional indemnity escrows and let sellers walk away with more cash at closing. It’s worth evaluating early, not late.

How I work the deal

If you’re buying, the work usually breaks into target evaluation, structure decisions, due diligence, negotiation, and closing. Diligence is where I spend the most time – reviewing financials, contracts, employment matters, IP ownership, regulatory exposure, and tax history. The point isn’t to find reasons to kill the deal; it’s to identify what needs to be priced in, indemnified against, fixed before closing, or walked away from.

If you’re selling, the work usually starts further upstream than clients expect. Three to twelve months of preparation (entity cleanup, financial normalization, customer and vendor contract review, legal exposure assessment) typically pays for itself many times over in the price the business commands and the speed of the eventual closing. By the time a buyer’s letter of intent arrives, the seller’s negotiating position is largely set by what’s already on the books.

For both sides, I coordinate with the broker or investment banker, the buyer’s or seller’s accountant, the lender, and the financial advisor handling the post-closing wealth picture. On smaller deals where there isn’t a banker, I help the seller think through what a buyer is actually evaluating and where the price sensitivity lies.

Who I represent

A representative cross-section of recent and ongoing engagements:

  • Owners selling profitable closely-held operating businesses (often after 20 or 30 years) and trying to optimize the after-tax outcome
  • Buyers acquiring a competitor, supplier, or adjacent business as a growth move
  • Professional practices (medical, dental, accounting, legal) merging or being acquired by a platform or strategic buyer
  • Real estate operating companies and holding entities in transactions involving both the operating business and the underlying real property
  • Family businesses where the next generation is buying out a retiring owner, often combined with succession and estate planning

If you’re earlier in the process (exploring whether to sell, evaluating a target you’ve been approached about, or thinking through how to position the business for a transaction in the next few years) that’s also work I do, and it’s often where the highest-leverage decisions get made.

Long Island, NYC, and the surrounding metro

I’m based in Melville, NY, and represent clients across Long Island, the five boroughs, and the broader New York metro. New York’s bulk-sales rules, sales-tax successor liability provisions, and entity-conversion procedures all matter in deals involving NY businesses, and the state’s tax department is increasingly active in post-closing audits. If you want to read further on your own, useful starting points include the American Bar Association Business Law Section, the IRS guidance on business structures, and the Small Business Administration. None of those substitute for advice tied to your specific facts.

Let's talk

Whether you’re months from a closing or years from one, the conversations are different but they all start the same way. Schedule a consultation and we’ll walk through where you are, where you’re trying to get to, and what the realistic path between the two looks like.