Presenting a live 90-minute webinar with interactive Q&A Negotiating Covenants and Closing Conditions in M&A Transactions: Practical Tactics and Techniques Crafting Provisions that Protect Buyer and Seller Interests and Minimize Legal Disputes WEDNESDAY, SEPTEMBER 9, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Martin B. Robins, Esq., Member, FisherBroyles , Chicago Samuel M. Shafner , Member, FisherBroyles , Boston Michael M. Sullivan, Member, Taylor English Duma , Atlanta The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800- 926-7926 ext. 10 .
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NEGOTIATING COVENANTS AND CLOSING CONDITIONS IN M&A TRANSACTIONS: PRACTICAL TA TACTICS AND TECHNIQUES Wednesday, September 9, 2015 5 00623964.PPTX
Faculty Martin B. Robins, Esq., Member FisherBroyles, Chicago Mr. Robins practices extensively in the general corporate and corporate governance, M&A, finance, intellectual property (including licensing, compliance and DMCA) and information technology/data security areas. He represents public and private clients of all sizes and in all industries ranging from Fortune 50 multinational firms to substantial private companies to start-ups to individual executives. His work encompasses transactions of all sizes and covers a wide array of transactions including business acquisitions, shareholder buy/sell agreements bank and similar financing, software licenses and computer/telecom hardware procurements, joint ventures, equipment and real estate leases, patent licenses, outsourcing and managed service contracts. He also publishes extensively in a number of legal journals and presents at legal conferences. Contact Information: FisherBroyles 203 N. LaSalle Street, Suite 2100, Chicago, IL 60010 Direct: 847.277.2580 Email: martin.robins@fisherbroyles.com Web: www.fisherbroyles.com 6 00623964.PPTX
Faculty Samuel M. Shafner, Member FisherBroyles, Boston Mr. Shafner is a business, corporate and securities lawyer for over 25 years. His clients range from young startups to major publicly traded companies, counseling them in both routine and extraordinary business transactions, as well as in launching new businesses, strategic partnerships and investments, acquisitions and divestitures, securities law, corporate governance, and all manner of business and transactional legal work. A large portion of his clients are international, located in Canada, Western Europe and Israel. He is a frequent writer and public speaker at conferences all over the world on M&A and finance topics. Contact Information: FisherBroyles 470 Atlantic Avenue, 4 th Floor, Boston, MA 02210 Direct: 781.821.0410 Email: samuel.shafner@fisherbroyles.com Web: www.fisherbroyles.com 7 00623964.PPTX
Faculty Michael M. Sullivan, Member Taylor English Duma, Atlanta Mr. Sullivan’s principal areas of concentration include general corporate, commercial and business matters, family-business law, financial matters, and mergers and acquisitions. He assist clients in negotiating all forms of complex corporate and commercial agreements and contracts, shareholder and buy-sell agreements, customer and vendor agreements, employment, independent contractor and work for hire agreements, non-compete agreements, and non-disclosure agreements. He advises U.S. clients on their legal structure and other matters when entering new International markets, and has negotiated numerous cross-border transactions for U.S. clients. Contact Information: Taylor English Duma LLP 1600 Parkwood Circle, Suite 400 Atlanta, GA 30339 Direct: 770.434.1567 Email: msullivan@taylorenglish.com Web: www.taylorenglish.com 8 00623964.PPTX
Why Do M&A Covenants Exist? Preserve conditions of target company as seen by buyer in due diligence. Preserve state of target company contemplated in representations and warranties. Certain post-closing obligations of the parties (especially in earn-outs, or in smaller M&A where the founder’s ongoing consulting support is vital) Distinguish from loan covenants (some overlap, but usually intended to maintain borrower repayment capacity). Can be best efforts or absolute. Fundamental consideration for both parties to M&A deal: are covenants intended to maintain operations as seller has done or to enforce buyer’s ‘world view’? 9 00623964.PPTX
Why Do M&A Closing Conditions Exist? Allow each party to walk away if it is not getting benefit of its bargain Usually non-symmetric to allow for differing interests of buyer and seller Not applicable for “sign and close” transaction Customary seller concerns • Proof of buyer ability to close (pay) • Material counterparty and regulatory consents • No legal impediments to closing 10 00623964.PPTX
Why Do M&A Closing Conditions Exist? (Continued) Customary buyer concerns • No ‘bad’ info from due diligence • Material counterparty and regulatory consents • ‘Bring down’ of financials to closing date • No MAC (Materially Adverse Changes) 11 00623964.PPTX
Program Scope This program is aimed at practitioners with M&A familiarity already, and thus will not deal with all potential covenants and conditions. As a convenient reference, a “menu” of some of the usual covenants and conditions is appended to the end of these slides, but we do not intend to discuss them. Our intention is to focus on emerging and controversial topics which are likely to prompt significant discussion. 12 00623964.PPTX
Public vs Private Company Distinctions ‘ 34 Act compliance, substantive and procedural (review by buyer during gap period?) ‘33 Act compliance if new financings permitted at all (incl. S - 8’s) Exchange and NASDAQ obligations Corporate obligations, substantive and procedural including potential fiduciary outs (‘go shop’ and ‘no shop’) to allow consideration of other offers which may be preferable for shareholders 13 00623964.PPTX
One Holder or Very Closely Held Targets vs “Diffuse” Private Targets Procedural compliance with statute and organic documents/corporate mechanics matters more, the more diffuse is the target Ability to consider other offers more important for more diffuse ownership situations If any private Reg D or other financings have been done within six months of proposed closing, this may trigger discussion of need for covenants or closing conditions aimed at preventing inadvertent public offering for which buyer could be liable 14 00623964.PPTX
Covenants: 1. Post-Closing Consulting: For small companies, often the cooperation of the founder is key to its continuing success. The buyer depends upon a smooth handoff. Yet the founder is selling precisely because he wants out! How do you make the commitment real and concrete, without violating the 13th Amendment (slavery)? What consequences make sense to impose? 15 00623964.PPTX
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