For many middle-market companies, the decision to hire a General Counsel has historically been driven by necessity. Legal spend reaches a certain threshold, regulatory complexity increases, or a major transaction creates a need for additional support.
Increasingly, however, private equity firms are viewing the role differently.
As buyers conduct more rigorous diligence and place greater emphasis on governance, compliance, cybersecurity, employment practices, and operational maturity, the General Counsel has evolved from a legal advisor into a strategic business partner. In many cases, the right GC can influence not only how smoothly an exit unfolds, but how much value is ultimately realized.
Exit Readiness Begins Long Before a Sale Process
One of the biggest misconceptions in private equity is that exit preparation begins when a company hires an investment bank.
In reality, many of the factors that impact valuation are established years earlier:
- Governance structures
- Contract management processes
- Compliance programs
- Board reporting and oversight
- Intellectual property protections
- Executive retention and succession planning
The most effective General Counsels help management teams build this infrastructure long before a business enters a sale process, creating a stronger foundation for growth and future diligence.
Today’s Buyers Are Evaluating More Than Financial Performance
Financial results remain critical, but buyers are increasingly evaluating the maturity of the organization behind those numbers.
They want confidence that the business can scale, withstand scrutiny, and continue executing after the transaction closes.
A strategic General Counsel helps ensure the organization is prepared by:
- Identifying and addressing risks before they become diligence issues
- Establishing governance and compliance discipline
- Strengthening documentation and reporting practices
- Coordinating stakeholders throughout the transaction process
When these elements are in place, management teams spend less time reacting to issues and more time demonstrating the strength of the business.
The Best General Counsels Think Like Business Leaders
Perhaps the biggest shift is how the role itself has evolved.
The strongest General Counsels do far more than provide legal guidance. They understand the investment thesis, recognize operational risks that could impact valuation, and help leadership teams prioritize initiatives that strengthen enterprise value.
Because they often sit at the intersection of sponsors, boards, executives, lenders, and advisors, they bring a perspective that few other leaders possess.
As a result, many private equity firms are beginning to ask a different question. Rather than waiting until legal complexity demands a General Counsel, they are evaluating whether the business has reached a stage where a strategic legal leader can help accelerate growth, strengthen governance, and enhance exit readiness.
A Leadership Decision, Not Just a Legal One
As exit environments become more complex and buyer expectations continue to rise, the role of the General Counsel is changing.
The question is no longer whether a company has legal support.
The question is whether it has a leader capable of helping management build a more valuable, more scalable, and ultimately more attractive business.
Ryan Harmon
Managing Director, McDermott + Bull
rharmon@mbexec.com
Ryan Harmon serves as Managing Director at McDermott + Bull and is based in Dallas, Texas. He plays an integral role in the firm’s continued expansion across the region to strengthen McDermott + Bull’s presence and client relationships throughout Texas. Ryan partners with private equity firms, portfolio companies, and corporate clients to deliver executive leadership across the private equity, residential and business services, and energy sectors.