Not every deal needs an army of lawyers and sky-high fees to get across the finish line…
So how are today’s owners navigating increasingly complex M&A—and why is buyer behavior making it more challenging than ever?
In this episode, Dennis O’Rourke, Partner and Chair of the Corporate, M&A and Securities Practice Group at Moritt Hock & Hamroff, shares why lower middle market companies don’t have to compromise on expertise or affordability—and explains how a dramatic shift in buyer dynamics, fueled by the rise of “other people’s money” (OPM), is adding new layers of complexity to deals.
You’ll discover…
- The surprising impact of buyers using investors’ and lenders’ capital—and why that’s changing diligence
- Why “simple” deals are rarely as straightforward as sellers think
- How to access big-firm legal expertise without big-firm price tags
- The hidden tension between buyers and sellers (and one way insurance is helping bridge the gap)
- The critical moment to bring in a specialist M&A lawyer—before it’s too late
Mentioned in this episode:
Transcript
Patrick Stroth: Hello there. I’m Patrick Stroth trusted authority in executive and transactional liability and national practice leader for mergers and acquisitions for Liberty Company Insurance Brokers, where we provide peace of mind with great care. Welcome to M&A Masters, where I speak with the leading experts in mergers and acquisitions, and we’re all about one thing here. That’s a clean exit for owners, founders, and their investors.
Today, I’m joined by Dennis O’Rourke, Partner and Chair of Corporate, M&A, and Securities Practice Group of Moritt Hock and Hamroff. With offices in New York and Florida, Moritt Hock and Hamroff is a mid-sized commercial law firm with a national and global reach.
Their animating principle strength and partnership lies at the heart of their commitment to their stakeholders and guides their approach to serving as trusted advisors and advocates. Dennis, it is great to have you. Welcome to the show today.
Dennis O’Rourke: Appreciate you having me and looking forward to our conversation.
Patrick: Yeah. And so before we get into your practice out there with the lower middle market, let’s start with you. How did you get to this point in your career?
Dennis: Yes, so you know, I went to the Naval Academy undergrad and served in the Navy after graduation for a while, and when I got done with the Navy, I was looking at graduate school and law school. Ended up going to law school and worked for a number of years in the city, and then came out to Long Island, and I’ve been here since. And you know, have my practice out here in Long Island and Manhattan predominantly.
Patrick: And then now, what’s the story with Moritt Hock and Hamroff?
Dennis: Well, when I first joined the firm, I think we had 20-something lawyers, and that was 20 years ago, maybe 21 years ago. Now we’re up to approaching 100 lawyers. So the firm is has experienced consistent growth, and I think the value we deliver to clients has allowed us to grow in a meaningful way where we help our clients achieve their goals in a way that’s pretty unique.
Patrick: So Dennis, you started 20 years ago. You’ve had some great growth. Talk about your commitment to the lower middle market, because a lot of organizations, when they go ahead and they focus on helping the lower middle market, they tend, over time, to go up market. As they grow their client appetite grows and they go there. You’ve managed to stay disciplined and committed to the lower middle market. So let’s talk about that, and then with regard to your M&A practice.
Dennis: Yeah, so lawyers, like any other business, right? In order to sell anything, whether it’s a product or service, you have to deliver value. And you can’t just provide a service. You have to bring a value. So we’ve identified a market that we feel is underserved where we could deliver value.
So our proposition really is the same service and sophistication as a much larger firm at a much higher price point, at a significantly reduced price point. And we represent clients who need what drives our practice, whether it’s in corporate, litigation, tax, or real estate, it doesn’t matter. Whatever we do, what drives our practice is clients who need the sophistication, but at a price point that’s a lot more attractive to them than what you would get at a much larger firm.
Patrick: Yeah, well, now when we talk about this, is this situation where just larger firms are just going up in terms of cost, just by inflation or whatever, or is there just simpler needs that are more focused. So, you know, clients don’t need full-time legal representation all the time. I mean, how does that dynamic work with the appetite for the client?
Dennis: You know, I can’t really speak about what’s driven the price up for the bigger firms, other than, you know, the salary that the compensation requirements for talent have gone up. And God bless them. If they could charge those rates and have a consistent stable of clients who pay it, then great for them, great for them. That’s what they do. We do something a little different.
Patrick: Yeah, and I think a lot of it coming from Silicon Valley, where we are. We were at the start of that kind of comp inflation for the legal community, because you had so many attorneys who were in intellectual property and dealing with all the emerging tech companies.
All of a sudden, if a law firm wanted to attract good talent, they had to start increasing their pay, I think. And then everybody just came in, you know, beyond you know, behind them, and you had to keep pace. Have the needs of clients gone up that much? Is it more complex? Or is it getting simpler in terms of just legal issues out there?
Dennis: Well, it always gets more complex over time. Whether it’s new laws, whether it’s new twists on the way we do deals that adds a layer of diligence or a layer of drafting. They always seem to get a little more complex. I’ve seen some transactions where buyers have tried to streamline the process, and they’ve been somewhat effective, but I think that’s for really lower, lower middle market.
You know, sub $5 million deals you could do that. I think once you’re above 5 million, you’re going to have a back and forth, and there are always regulatory issues, permit issues, real estate issues, tax issues, on and on and on. Buyers, what’s really driven this a lot, I think, is buyers in today’s world are really spending other people’s money.
There are funds that have raised money from investors, and they’re leveraging deals, borrowing from lenders, and those they have an obligation to those lenders and those investors, which they should. And they take those obligations very seriously. So, we’ve seen a real uptick in the level of diligence, you know, that is being performed by the funds because they are spending other people’s money.
And even when you’re dealing with strategic buyers, a lot of them are public companies that are spending shareholder money, and they have obligations to those people, and they should, and they take those obligations very seriously. But that has added layers to these kinds of transactions.
Patrick: Yeah, and I think that just over time, the point-and-click kind of attitude a lot of consumers have is that things are easier. There are fewer steps. I just go ahead and I want something, I click and it should be handled. The problem is that all those simple things on the surface, there’s a complex network of steps that have to be done, and then there’s just more legal connections with those extra steps are you’re trying to optimize.
On top of all that, everything is done at a much higher level, cost-wise. And so what used to be a straightforward transaction now could be 10s or hundreds of millions of dollars. And that’s definitely been a development that’s happened. So Dennis, talk to me about Moritt Hock and Hamroff, particularly with your M&A practice. What are you bringing to the table, to the lower middle market?
Dennis: Yeah, so that’s a great question. So what we bring is really three things. We bring a level of sophistication that’s hard to deliver at the price point we deliver it at. We bring a team of people. So I have approaching 20 lawyers in my group at a 90 to 100 lawyer law firm. So we have a very substantial group.
So we have the depth, and we have the bench to keep pace with the much larger firms. And we bring, which I think is really important, an attitude to a transaction that we’re going to find a way to get it done. We’re going to be creative, we’re going to be flexible, we’re going to provide solutions. Because in every transaction, there are always hurdles.
In every transaction. And it’s incumbent upon, predominantly, the lawyers and the investment bankers to find solutions. And what we see is, what I see is in the lower middle market, too many lawyers want to argue about they’re right, and you’re wrong. And normally, both people are right.
Both sides have reasonable positions, and when both sides have a reasonable position, it’s the lawyer’s job and the investment banker’s job to find the solution and to be creative and be flexible so that the deal can move forward. So that’s what we bring. And we think that it’s unique, both in terms of the staffing we could provide on a transaction.
It can happen quickly, and the sophistication we bring and the solutions that we bring to the table. The combination of those three things, really, I think, makes us a unique value proposition in the lower middle market.
Patrick: I think it’s fantastic because you’re trying to get the deal done. You’re trying to work on a way to find a solution, to work through a deal, rather than, you know, being combative. I think also, you don’t have the attitude that the deal’s got to be closed at all costs. If it’s not a good deal, if it doesn’t make sense, you’re the advocate and you’re the trusted authority there.
And you’re going to come in and represent your client properly. That being said, I think what’s really helpful here is there are a lot of owners and founders out there who may have a trusted attorney for their corporate work for the years, but the skill set required for mergers and acquisitions is different.
And what could happen is a lot of owners and founders will think, well, you know, I need to go ahead and change to get an M&A attorney. That means I’ve got to go upscale and go default to some institution and go that way where they’re not going to get served right. The resources won’t be there to be provided for them, but they’ll be overcharged.
And I think what’s great as an organization like yours, you’ve got all the resources. The great benefit is you’ve got it at a cost savings that is reasonable. And I think that works because you’re ultimately trying to get across the finish line for them the right way.
Dennis: Yeah, what I like, what you just said, is we love when clients have either in-house counsel or they have outside general counsel that has been with them for 20-25 years. It’s great. It is such a benefit to us because there’s institutional knowledge that the lawyer will have that they could translate to us in a way that’s great.
So a lot of the outsourced General Counsels or in-house, you know, they don’t like to bring in a specialist for M&A or a securities transaction when they really should. Because we love it. We do not at all try to cut those folks out. We love that they’re in the transaction.
We love that they’re involved, and we let them play their role, and we support them, and we just want to play our role, right? That’s all we’re looking to do is for us to play our role and we work really, really well with companies that have either outside general counsel or in-house counsel. It’s a great benefit.
Patrick: Yeah, also, I think that you have the attitude, particularly with the buyers council too, because you’re working on an M&A transaction, as opposed to other attorneys, I might be dealing with litigation or some other more adversarial situation. You guys are both trying to find the solution to go forward. I think that can grease the skids. Is that what you’ve seen in your experience?
Dennis: Yeah, and I mean, you need experienced lawyers who do this all day, every day. Most lawyers in transactions are trying to find solutions. But you need the experience to have a full bag of tricks, so to speak. And not tricks in a bad way, tricks in a good way, to have a full, you know, cupboard of solutions.
And the only way you learn that is through experience. So lawyers who do this all day, every day, if they’re good, right, and if you’ve been around for a while, you’re not going to stay in business as an M&A lawyer unless you can find solutions. Usually, it’s just not going to work.
So you need a lawyer who’s been around the block a few times, a bunch of times, and knows how to pull out a solution. You know what the pressure points are, what the normal you know, areas where you’re not going to make any progress, where it’s it’s got to be a certain way, in the areas where you can make progress.
And I think the big thing, a good M&A lawyer views a deal as a package deal. So the cap in the basket versus the issues on the working capital versus issues on cash upfront versus earn-outs. All of this is a package, and when you change one variable or move one variable, that changes all the others.
So you have to have someone who can see the big picture and work at putting that puzzle or that package together so that it works as a package. You can’t focus on one issue here and one issue there, because focusing on one issue to the exclusion of the others, you’re going to end up with a bad result.
Patrick: Yeah, nothing’s in a vacuum. Exactly.
Dennis: Right. Nothing’s in a vacuum, and you have to have advisors in a transaction who understand how all these pieces work together, and understand the package and how the package works together, so that both sides, the buyer could get a package that works for them, and the seller could get a package that works for them.
Patrick: In addition to the legal and the technical aspects of a deal, I think you’ve got to have some empathy too, and probably have some patience for some of your clients, because it’s the first time they’re going through this. And so I have a feeling you could be part psychologists, too.
Where a response comes in from the other side and you’re sharing the news with your client, and you’ve got to manage expectations, because they’re like, this is a point I am not budging on. Not at all. I’m not doing this. And you can come in and say, well, as you said, we got one variable here, four others. You know, can you be flexible here? Because that impacts these other ones in your favor, which they didn’t even think about.
Dennis: Right. You have to be willing to say, okay, you should give this because you’re going to get this. Let’s focus on what’s important to you. Let’s not try to win a point for the sake of winning. And part of that comes down to practicality, too. What’s the practical risk that if you give in on this, that’s going to create a problem for you.
But, but the biggest, one of the biggest things, along the lines of what you just said, Patrick, that’s so important, is not just to listen and be a psychologist with your client, but to listen to the other side and what they have to say.
It’s so important because it goes such a long way to saying to the other attorney or the other, the buyer or the seller, whoever’s on the other side, you know what, you make a really good point there. And we really need to take that into consideration, and we need to work with you and find and address that in a way that works for you.
Because you know what, that’s a really good point that you know that needs to be included in the deal. And that goes a long way towards your credibility. So when you say no, no, I really need this to be this way, you’re already a reasonable person entering the conversation and not just trying to get everything one way.
So listening to the other side and what they have to say, and what’s important to them, is really, really important, because lawyers, especially lawyers, love to hear themselves talk, no, no, but they don’t really love to listen. I love to listen. I love to listen to everybody.
Hear what they have to say, formulate a strategy, and then present it, and hopefully present something that works for everybody. And part of that really is listening to what the other side, to what their concerns are and what’s important to them.
Patrick: And these are emotional times. I mean, there is no event in an owner or founder’s business cycle lifespan that’s bigger than an exit. And you know, it could be, in some cases, life-changing or generational impact that could have, you know, long effects there. So people take it very personally, and there’s a lot of risk there.
So, you know, there’s always that added pressure that’s in this. Which is where we would turn to what’s been happening in the lower middle market, is that there’s this massive financial risk that’s borne by the parties. Not just in large publicly traded deal,s everybody thinks about when Amazon bought Whole Foods, and it’s like, that’s what they think about M&A.
No, it could be somebody selling their 20-year-old business for $10 million, and that could be a very sizable chunk, and that’s very, very personal, and so there’s a lot of risk there. And what we’re proud of in the insurance industry isthat we’ve come up with a tool to transfer that risk away from the deal parties to an insurance company. It’s called reps and warranties insurance.
It has, I believe, really accelerated M&A transactions, because it facilitates a transfer of this risk and smooths everything out. But, you know, don’t take my word for it. Dennis, you’ve been in this 20 years. Rep and warranty had been around for more than 10 of those 20 years. Good, bad, or indifferent. What’s your opinion?
Dennis: Yeah, so I’ve been a lawyer for 30 years. I’ve been at this firm for 20 years, but it’s been a long time. So, along those lines to your question, we are huge fans of rep and warranty insurance. Huge. The premiums have come down to a price point where you could get rep and warranty insurance in a 10 or $20 million deal, and it makes economic sense, and it gives everybody some comfort, right?
Because the biggest tension you have in a smaller deal, because, you know, damages and losses rack up so quickly in today’s world that you have a seller who wants to sleep at night and have some assurance that they’re going to walk away with whatever the dollar amount is, right?
And you have a buyer who, you know, is taking a big risk buying a company, and they want to make sure that if there’s a problem, they’re going to be economically compensated for that problem. And that causes a natural tension, and rep and warranty insurance not fully alleviate that tension, but to a large extent, seriously reduces that tension at a price point for the policy that’s very attractive.
So we are huge fans of it. When you can get what I call regular rep and warranty, that’s great. But we love the rep and warranty lite. The buyer protect, seller protect policies ,which not too many people know about in the marketplace, surprisingly. We’re huge fans of those policies, and we suggest it to our clients on a very, very regular basis.
Patrick: Yeah, and what you’re referring to when people think about reps and warranties insurance, most people in the M&A community are familiar with reps and warranties, where it’s what we call a buy side policy, where the buyer is the named insured, the premiums, are set up in their structure around transactions that are in the 75 million to billion dollar range.
So they go from like lower middle market all the way up in the billions. There’s an underwriting fee, and the purpose of the policy is to look at the diligence that the buyer performed, and if everything checks the box, then if there is a breach, and that breach costs the buyer, the buyer goes right to the underwriters and gets a check.
Seller gets a clean exit. The problem with the buy-side traditional policy is that it is built for larger deals, and it’s on a cost structure that’s for larger deals. And there are a lot of deals where the purchase price is anywhere from a million to $50 million, which is way below the threshold for the traditional policies.
And that’s where underwriters in London came up with what they call TLPE, transaction liability private enterprise. Otherwise known as seller protect. And what it does is it insures the seller. It just goes to the other side of the table, insures the seller so that if there’s a breach, the seller’s policy will pay the buyer the buyer’s loss.
So the buyer gets remedy, sthe eller gets their clean exit, and it’s just on a different model from the traditional. The great thing is there’s no underwriting fee, which is about a $40,000 cost savings, and the premium rates are between $15 and $20,000 per million in limits. So it has been a great catalyst for now smaller deals, which they’re not going to be as buttoned down diligence-wise as the larger transactions. But they’re also less complex.
They’re lower risk, and lower risk deals should get a lower cost structure because they are a safer deal for underwriters. And so we’re very, very proud of that. That’s the seller protect, also known as transaction liability private enterprise. Now, Dennis, can you give us a profile of the ideal client for Moritt Hok and Hamroff? I mean, who are you guys looking to serve?
Dennis: Yeah, so on the M&A side, on the sell side, we predominantly represent family businesses selling to either private equity or to a strategic, an industry buyer. Deal sizes anywhere, 150 million to 200 million range and below. And that’s where we service it. And again, we’re really looking for clients who need the sophistication at a price point that makes a lot more sense for them than if you’re doing a $2 billion deal.
The great news for us is on the buy-side we’re seeing, we’re picking up private equity clients on the buy side who are, the light bulb is going on on the buy side that for the sub $200 million transactions, you could get really good legal advice, again, at a price point that just makes a lot more sense.
And so we’re seeing some real buy-side activity as well. You know, that’s really our client base are, you know, I don’t want to be repetitive, but it’s, it’s really people that what drives our practice is the sophistication. It’s people that need the sophistication, but they’d like to get it at a price point that makes more economic sense for the size of transaction that they’re doing. And that’s what we do, and we’re really good at it, and we’ll continue to do it.
Patrick: There are going to be a lot more targets out there for acquisition coming up.
Dennis: I think so. I mean, when you look at the statistics, it’s overwhelming that the second and third generation. I can’t tell you how many times we hear from our clients who are selling, my one kid became a doctor. My other kid is an investment banker, and they don’t want to run this manufacturing, distribution, or factory.
Or they don’t want to run this kind of business. They spent their whole childhood here, and they can’t stand it. They want nothing to do with it. So we’re selling it. We hear it all the time. We hear it all the time.
Patrick: Now, Dennis, with Moritt Hock and Hamroff, what’s a good time for clients to come and reach out to you? I mean, should they come and see you as they’re laying the groundwork when they’re thinking about an acquisition, and sometimes they talk to investment bankers or something, or do they wait until they’re presented with an LOI? What’s an ideal time for you?
Dennis: I mean, the earlier the better, right? So many clients are, because they’re looking to save costs don’t bring in people early enough. When you think about what good lawyers can do, right?
We might, if you have key employees, we might be able to get them equity on a favorable basis, and then you could lock them up with restrictive covenants that the buyer is going to want to see. There are so many things we can do early that are going to add value and increase the proceeds that the seller takes off the table.
If you wait too long, you know your opportunities to do that, and that doesn’t even get into we haven’t even touched upon the trust and estates and the estate planning you can do if you come early. The longer you wait, the worse you’re going to be. And certainly, you should never sign a letter of intent without having a good, qualified M&A lawyer review it.
Patrick: Yeah. Now we didn’t talk about this earlier, but it just sparked a question from me. Again, no disclosure or anything. But have you had situations there where a client says, look, this is a real straightforward transaction. There’s nothing there, you know, let’s just go for it. There’s nothing there. And then you found something to say, well, we may want to look at this first.
Dennis: Everyone says their transaction is simple until you start, until you start getting into it. We hear it all the time. And I will say, about 100% of our clients at the end of the process say, I cannot believe how complicated and how intense that was, and how the labor that was required, and all of these things.
And they thank us, and they say, you guys did a great job. And, but everybody comes to us, almost everybody, and says, my deal is very simple. It’s a simple business. And I say, okay, if that’s, if that’s the way it works out, great.
But most of the time, you’re going to see there are going to be bumps and structural issues and due diligence issues and all those kinds of things which we deal with every day that need to get straightened out. And that’s what we do for a living. But, you know, and if your deal is simple and it’ll get done quickly and it’ll get done cheaply, and all the more power to you.
Patrick: But more importantly, if there’s something there that you didn’t know about, it’s nice, because if you’re prepared, it levels the playing field. I think you do a lot of leveling the playing field for your clients.
Dennis: Well, we try to talk to them up front about what the process is going to look like. Because they can’t from both sides, right? So if you’re representing a seller,I always say to the seller, every time you think the buyer can’t ask you for more due diligence, they’re going to ask for something.
And you’re going to fall off your chair when you see the amount of diligence you’re going to have to give them. And when I say, when I represent buyers. I say every time you think a seller has disclosed everything to you, they’re going to disclose something else.
And it’s really, but again, if you have good advisors, the advisory team, so the lawyer, the investment banker, the accountant and the insurance professional, and your wealth management team. Those folks need to be involved early. And, again, you should not, clients should never view their lawyer.
If you view your lawyer as a cost center, you have the wrong lawyer. You have to view your lawyer as what value are they bringing to me? At the end of a transaction, you’re gonna say, I don’t care if they charge you $5,000 or $500,000 you should walk away saying, I got more than that of value from that lawyer.
Patrick: Absolutely.
Dennis: And if you’re not saying that, if you’re not saying that about your lawyer, you have the wrong lawyer. And the same thing with an insurance professional, same thing with an accountant, same thing with the wealth management firm. Same thing with your investment banker. They should all be adding value to your process, not taking money. They should not have their hand in your pocket. They should be adding value to the process.
Patrick: Yeah, well, and that’s how you talk about with your very, you know, short saying there. Strength in partnership. It’s a partnership, and there is strength together, working together, as opposed to opposing forces.
So I think that, I think that hits right at the core of what you guys are about. And what you know, I believe with M&A transactions. It is not, you know, Amazon buying Whole Foods. It’s a group of people choosing to partner with another group of people so that, you know, one on one equals four. And that’s what everybody likes to look for on that.
Dennis: I mean, I say to clients all the time, I never, never want you to be afraid to call me because you think you’re going to get billed. Like that’s the worst-case scenario for everybody. So, we work with clients where they’re happy and we’re happy.
Patrick: That’s fantastic. Now, Dennis, we’re in the second half of 2025 here. What do you see, trend-wise, as we get into 2026?
Dennis: I think service businesses are still going to stay hot. I don’t see M&A slowing down, if any, it might not reach the peak it was in 2021 or ’23 whenever it was. But it’s going to be robust. There’s a ton of money out there on the buy side. And, you know, there are willing sellers. When you look at generationally, what’s happening. So, I don’t see a slowdown, and I see recurring revenue service businesses I think are going to stay hot for a while.
Patrick: Yeah, and they’re insulated from tariffs, so another factor.
Dennis: Insulated from tariffs, and it’s predictable. You don’t have to deal with a lot of inventory, and you don’t have to deal with equipment. You don’t have to deal with them, but if you have those kinds of businesses, or businesses with good, long-term contracts, right? So, you could be in the industrial side of the world if you have good contracts and customers and good projects going on, you’re going to be fine.
Patrick: That’s excellent. Now, Dennis O’Rourke of Moritt Hock and Hamroff, how can our audience members find you?
Dennis: You just, if you Google my name, it’s not going to be hard. You could reach out, or you could just, I’m not a hard guy to find. All you have to do is look at the firm website or Google my name, and it pops right up.
Patrick: Well, fantastic. Again, it was great seeing it today, and you’re part of the infrastructure out there that’s facilitating a lot of these lower middle market deals moving forward and protecting owners and founders. I really appreciate what you guys are doing there. I look forward to talking to you again.
Dennis: Absolutely. Thanks for having me. I really appreciate it.
