Episode Summary
Most founders selling their firm assume the investment banker comes first and the lawyer follows. Tim Belden, co-founder of EnergyGPS, did the opposite. In the middle of his own exit process, he hired his M&A transaction attorney before the bank, and that one sequencing decision reshaped everything that came after. In this episode, Tim walks through the framework he used to choose the right attorney: when to hire, what skills actually matter, whether to go with a large firm or a boutique, and whether to stay with your current lawyer or bring in a new one.
Key Takeaways
- Why hiring your transaction attorney before the investment banker gives you a critical edge — and how the attorney can run your bank selection process for you
- The most important attorney skill isn’t legal mastery — it’s the ability to serve as both counsel and counselor, providing business advice alongside legal work
- Large firm vs. boutique legal counsel: the tradeoffs of one-stop shopping vs. a la carte, and why Tim chose to be his own general contractor
- Why switching to a new law firm for your exit — even if you’re happy with your current firm — can bring fresh perspective and a more motivated advocate
- How to manage scope and avoid runaway legal fees: set ballpark expectations for each phase and hold your attorney accountable to them
- Why engaging the attorney early pays off: long-lead-time items like tax structure, employment agreements, and org cleanup need to happen before the deal, not during it
About the Guest
Tim Belden
CO-FOUNDER · ENERGYGPS
Tim Belden is Co-Founder of EnergyGPS, a market analytics firm for electricity and natural gas. EnergyGPS provides subscription-based analytics to traders in short-term energy markets and advisory services to utilities and energy companies. As a Collective 54 member actively navigating his own exit process, Tim brings a practitioner’s perspective to one of the most consequential decisions a founder can make.
Full Transcript
Greg Alexander: Hey everybody, this is Greg Alexander, the host of the Pro Serv Podcast, and that is the show that you’re listening to right now. This show is dedicated to helping founders of boutique professional services firms do three things: make more money, make scaling easier, and make an exit achievable. So if you are in the business of expertise, you market, sell, and deliver expertise for a living, this is for you.
On today’s episode, we’re gonna talk about an exit topic. We’re going to discuss how you build a team to help you exit your firm, and one member of that team in particular — which is your attorney, your transaction attorney that’s gonna help you get the deal done. Our point of view is that you need to have five members of your team, and just real quickly, those are your investment banker, your lawyer, your accountant, your wealth management firm, and in some cases, although not always, an exit consultant. The quality of your team will dictate the quality of your exit. But today, we’re going to spend our time on the attorney, because we have covered the other topics. And joining me today is a Collective 54 member who has just hired his attorney and is in the middle of his exit process. His name is Tim Belden, and he’s with Energy GPS, and he was kind enough to come on our show today and tell us a little bit about how he just went through this. So, Tim, it’s good to see you. Maybe tell everybody a little bit more about yourself and what your firm does.
Tim Belden: Yeah, sure. So, Tim Belden. I am a long-time electricity and natural gas industry specialist. Me and my business partner, Jeff Richter, we started a firm — a market analytics firm for electricity and natural gas. We have two business lines. One is selling analytics to people that are trading in the short-term markets — think of it as a bespoke Bloomberg terminal, it’s a subscription business, great annual recurring revenue — and that’s about 75% of our business. About 25% of our business is advisory work — we advise utilities and large energy companies on how to best manage their assets in the energy markets. We’ve been doing that for about 14 years, and we are now contemplating an exit. And you know, you’ve been doing Boutique in Practice for a while, and I’ve been a member for about three years, and we’ve done a number of Boutique in Practice and Boutique in Theory sessions on exit, and I’ve learned a ton. And one of the things that I knew I needed to do was start this exit process. And we’re starting to feel like this might be a good time, both macro as well as where we art there. Have you walk us through how you thought about this, and what advice you might have for others that are getting ready to do so.
Tim Belden: Well, great. So first, thanks, Greg, and it is a pleasure to be here. Starting an exit process is — you want to get a handhold on something, right? You need to get an investment bank, you know, all the four or five elements that Greg suggested, and it’s kind of hard to know where to start sometimes. When we first talked to some investment bankers, they said, oh, well, hire the investment bank first, and we’ll recommend the accountant and the lawyer. We ended up getting introduced to a number of exit attorneys through Greg and Collective 54. And so I really thought about it in four different ways. First, when do you hire the attorney? Two, what skills do you need them to have? Three, do you go with a large firm with a reputation, or do you go for a smaller boutique firm? And then fourth — and maybe this is the first question — is do I use the attorney that I’ve used for many other things so far, or do I go with a new one? Maybe I can just give the highlights of my thought process for each one of these. So when is, like, upfront. Without a doubt, I would hire your attorney before you hire an investment bank. For a bunch of reasons that I didn’t even know until we hired ours. One was our attorney — we ended up going with Metz Lewis, and it’s John Lewis of Metz Lewis. And it turns out he’s done so many transactions, and he knows a bunch of investment banks. So one of the things that he helped us with up front was he actually ran a process for us to hire an investment bank. He had enough knowledge of investment banks, enough interactions with them, so that he could run a process. And part of that process was introducing us to banks that we otherwise wouldn’t have met, but also getting some pretty good intel on fee structure — sort of what’s market for fee structure. So definitely up front. The bonus prize was helping us with getting the investment bank, which solves two handhold problems. And then the other thing is there’s a bunch of long lead time items — just getting your house in shape. There are things like your own personal finances, there’s taxes, there’s structure of your organization, there’s what sort of flexibility do you have, there are employment agreements potentially with your employees. The sooner you can get into that stuff, the better. So upfront is a hard, absolutely do that.
Greg Alexander: Let me interrupt just there for a second. I want to add an exclamation point on something. You know, I was an observer to this process, and I saw you hire John, and I saw you hire him first, before the investment bank. Which is a different approach than most people take, and it worked out really well for you, so it’s important to acknowledge that this was a different flow than others. And what I witnessed through that process is that John provided you more than just legal advice — he was providing you business advice, and you shared some of that, and how valuable that was as you’re going through this process. So the learning that I want to extract for members is: consider hiring the attorney first instead of hiring the bank first, and make sure when you do hire the attorney, they’re not just somebody with mastery of the law — they’re somebody who can play the role of business advisor as well. Okay, let’s go to the second one.
Tim Belden: Well, Greg, you’ve been reading off my cue sheet here. The number one skill is advisor. I had this conversation with John. I said, I’m sure you can mark up documents, I’m sure you can redline things, but ultimately, you know, it’s the largest transaction of my life, and I need someone who’s counsel as well as counselor. You’ll hear from the attorneys and from others a bunch of capabilities from the legal front that you need. You’ll need tax advice, you’ll need corporate structure — at least vetting, if not advice on that. You need HR. And it seems to me most of the attorneys that we talked to, anyway, led with the tax, right? Because so much of these deal structures are driven by tax. Tax can move the needle pretty substantially, depending on a number of factors. Let me also say that there were other really great law firms within Collective 54 who we spoke to, and I don’t — John and Metz Lewis are fantastic, but I think there are others that are equally talented and ought to be considered as well. And then this kind of morphs into the large versus small question. Do you want one-stop shopping? You’ll talk to folks and they’ll say, well, we can do the deal, we have our — usually the lead deal person is also a tax person — they’ll say, we’ve got HR people, we can help you with corporate structure. And there are advantages to having that all in one place. My personal preference is that you could a la carte this as well. I think you have the risk with a large firm of people piling on the billable hours, where every call, everyone’s got to be on there — HR person needs to be on this call, corporate structure person needs to be on that call. We’ve structured it so that we’ll take whatever we can from Metz Lewis. And I was really clear with John up front — I’m totally good spending money, but I’m also a consultant who bills for my time. I know a quality hour versus an add-on hour. And so it’s totally possible to a la carte it, where if you’ve got a really good HR person who knows your company, who’s done employment agreements, who knows your policies — you don’t need to kick that person to the curb, they just need to be brought into the loop. Personally, I think the piling on of multiple people at one firm is probably more expensive than the transaction costs associated with working across firms. Others might disagree, but I’m happy to be the general contractor on my attorney staff.
Greg Alexander: You know, it’s a great point. I remember when I went through my process — every time I got an email, there were like 25 people CC’d on it. And having never gone through this before, I didn’t understand what that was until I started getting the bill. And then we’d have a conference call like this one, and there’d be all these people on there, 90% of them didn’t say anything, and then I’d see the bill. And I’m not suggesting that anybody’s doing anything wrong, but if you go with a really large firm because you want ease of doing business and you don’t want to be the general contractor — that’s what’s going to happen. You’re going to end up spending a lot more. For some people that’s worth it to them. They want to throw money at it and make it easy. For other people, it’s not worth it. They have capable people internally and they can farm out the work as needed. So I think that’s a really good dimension. And one of my questions — which you just answered — was going to be about scope. How do you determine scope and keep the scope tight so that we don’t have runaway legal fees? So beyond that a la carte description, was there anything else that you did as you were working through the scope?
Tim Belden: Let’s come back to scope in just one minute. The final thing is my firm versus a new firm. And obviously I picked a new firm. I think there are a couple of advantages. So, first of all, my existing firm — totally happy with them. Mostly contract stuff — most of the work that I’d done was contract stuff. My main person had a partner who did M&A work, but he wasn’t my guy. I would get a little bit of his time, but it was after the other important clients that the M&A guy had to work with. And so I found that going to a new firm — one, it put my existing firm on notice. He said, whoa, why didn’t you pick us? And I told him. He said, okay. I said, we’re good, I’m still working with you on contract stuff, but this is why I picked a new one. I also think a new firm gives you another bite at the apple — another set of eyes, a second opinion. So anyway, I think there are pros and cons. If you’ve got a great firm and you’re happy with them and they’ve got the whole suite of services, you don’t need to go to a new one, but you should not be scared to go to a new one. That new firm is psyched to have you as a client, and they want to impress you, and that’s worked out well as well.
Now, on scope — you don’t want to sound like a cheapskate, right? There’s nothing more annoying as a consultant than the client who’s always combing through every single thing you do. So there has to be a level of trust. But also because I’m in the business of selling my time, I know what clients ask of me, and so I asked the same of my attorney. I said, for every step — for example, getting the M&A firm — what’s that gonna cost me? What ballpark figure? And what I mean by ballpark is, if it’s vastly different than that, you better have a pretty good reason why. It’s not like I need to be within even 10%. I just need to know the zone, and if it’s way out of that zone, you need to explain why. So we started on finding the investment bank, and there was a certain amount he quoted — mostly just coordinating and sitting in on calls. That worked well. And then he also gave me a ballpark for the transaction zone overall. He said, right up front, this is about what it’s gonna cost you. And knowing that I work on M&A deals as well — not as an attorney, but as a subject matter expert — you know, they can go left, they can go right, there can be 27 turns of the document, the other side can have a lawyer that’s a big pain in the butt. So they gave us a range, basically like a 25th to 75th percentile — this is the zone that the whole deal’s gonna cost you. And so far, so good.
Greg Alexander: Yeah. Usually when an attorney gives you a ballpark figure on what the total legal bill’s gonna be for a deal, it’s often expressed as a percentage of the anticipated enterprise value. Is that how it was expressed to you, or was it expressed as just a dollar amount?
Tim Belden: Just a dollar amount, yeah.
Greg Alexander: Got it. And then, when you contracted with the attorney, did you go traditional time and materials, or did you get a fixed bid? How did you handle the contracting part of it?
Tim Belden: I think it’s time and materials. Yeah, there’s no fixed bid.
Greg Alexander: Okay. And sometimes that can get out of control — runaway projects, all of a sudden the budget is 2X. Are you worried about that, or do you think the scope is tight enough that you didn’t have to fight the battle around a fixed bid?
Tim Belden: I didn’t know enough to know what good fixed bid was. And I’m comfortable being a lawyer’s general contractor. There’s also consistent messaging. I’ll give you an example — early on there was a second attorney on the investment bank calls, and so I emailed John. I said, hey, I don’t think I need two attorneys on that call. I’m not trying to be cheap, but why do I need a second attorney on that call? And he sent a nice note back — he said, hey, it’s an attorney that hasn’t been part of this process before, and I’m not charging you for her time. He didn’t tell me up front, and that’s probably just because he’s a fair, honest guy. But you do want to do subtle things along the way where you’re like, I’m watching — I’m not cheap, but I want to know that I’m getting staffed correctly.
Greg Alexander: Yep. When you were doing your evaluation and talking to all these attorneys — which was very deliberate and intentional, and it’s great learning for all of us — as it relates to price, did you price compare, or were they all plus or minus 5% that you didn’t have to spend a lot of time on that?
Tim Belden: I’m not even sure I asked them their price. Once I knew who I wanted to go with, I didn’t actually shop on price.
Greg Alexander: Okay. Yeah, and I think that is another piece of advice worth reinforcing, because sometimes I’ve seen members literally ask for a rate card and start negotiating the attorney based on dollars per hour. If you think about it, it’s kind of ridiculous, because what really drives the needle is how many hours, not the dollars per hour. So if you’re going to save 35 bucks an hour from one attorney over another, it’s really not going to save you any money, because what’s gonna drive the total is the hours. And what you end up doing is signaling to the attorney that you might be a pain in the neck client — maybe they don’t even want you.
Tim Belden: Exactly. You want to be a good customer — that’s what you want to be. And I think they’re all in the same zone in terms of hourly rate. The other nice thing is you can probably get some variation on the rates because you don’t need a New York City lawyer to do this deal. I got a Pittsburgh lawyer. The cost of living in Pittsburgh is lower than New York or Los Angeles. So you can get a great lawyer anywhere.
Greg Alexander: Yeah, and if you think about it, that Pittsburgh lawyer — who I know, because he’s a member of the community — I’d put his track record up against any high-powered New York lawyer there is. So that whole idea of buying the brand, the name of the firm — at least in the situations that we’re in at Collective 54 — it’s not worth it. Maybe if you were doing an IPO or something like that it would be a different story, but in our case, it’s not worth it. All right, well, those are the questions that I had. We want to keep this short, about 15 minutes, and keep some of the powder dry for the private member Q&A. But before I let you off the hook here, were there any other thoughts that popped into your mind — parting wisdom?
Tim Belden: Oh, that’s a good one. You know, I think the parting wisdom is really what I’ve said already, which is: you want an advisor. Somebody who’s gonna play nicely in the sandbox with others — he’s not gonna piss off your investment bank, but he’s not gonna let your investment bank run you over. He’s gonna hold the line with the other side, but be reasonable. You know, if you’re gonna get a total knee replacement surgery, you want a person that’s done a thousand total knee replacements — you don’t want your primary care physician. You just want someone who’s seen it all, and that’s what I would recommend.
Greg Alexander: Yeah, awesome. All right, well, hey, listen — on behalf of the community, Tim, this was a big contribution. I appreciate you giving back. You’ve been a great member, and this is an example of that. So, thanks for being here today.
Tim Belden: Alright, you’re welcome. See ya.
Greg Alexander: All right, just a couple calls to action for listeners. If you’re a member and you want to hear more about this topic, attend the private member Q&A session that Tim will be a part of — you’ll be able to ask your questions directly of him. And if you just want more content, I would drive you all to my new Substack channel, which you can find at Greg Alexander C54. But that’s it. I appreciate you working me into your busy day. I know your time is precious, and hopefully this was of value. Until next time, I wish you the best of luck as you try to grow, scale, and someday exit your firm.
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