The flip side, which anybody who works with lawyers on a weekly basis knows, is that lawyers can complicate stuff enough that people will walk away from the deal. This isn't advice, just an observation.

I agree with this sentiment. Lawyers have a much lower risk tolerance than entrepreneurs for obvious reasons. Yes there are horror stories of underrepresented entrepreneurs getting screwed, but what gets mentioned less is the opposite situation that tptacek alludes to, where deals are killed because too much control is given over to the lawyers, and the forest is lost to obsessive focus on the trees. As nice as it would be to turn over control and wash your hands of all legal decision-making, lawyers must be managed, just like any other employee or contractor. It can be intimidating for young entrepreneurs to override the recommendations of older, more experienced attorneys, but that is exactly what is sometime required to make deals like this go through.

As has been mentioned on this forum many times, there are plenty of law firms (in the Bay Area at least) who have emerging business practices that will defer your fees until an acquisition or an investment event occurs.

Absolutely true, but never forget: The buyer has an attorney on their side, looking out for their interests. As long as you do not, you are screwed.

What if the buyer offers employment with a 70% purchase upfront and the rest spread out over three years? Good deal or bad deal? Ask your attorney... What if this, what if that? All of them are "ask your attorney" items.

This is not simple, just look at this: http://en.wikipedia.org/wiki/Mergers_and_acquisitions

All of this issues apply to a company being bought out, large or small. (i.e.: Does the valuation section alone seem a simple, "do it yourself" task? Large or small, companies being bought need to be valued correctly)

Unfortunately, to come out ahead, you need to spend money on the attorneys. And specialist attrneys at that...

I believe most of these potential deals fall through. If you spend a ton of money on an M&A attorney every time someone mentions acquisition, you're screwed.

I would think that there would be some initial fixed costs that you wouldn't have to repeat on your second time around. Also, it would provide valuable insight into some aspects of your company you haven't thought about (valuation).

Does anyone have evidence that costs diminish in this example?

Is it get an attorney or get an investment banker? I asked a related question about the value of investment bankers awhile back and got a nice answer: http://news.ycombinator.com/item?id=192860