post-closing business integration

POST-CLOSING BUSINESS INTEGRATIONPrivate Company M&A Boot Camp 2016

Premier date: June 22, 2016

© 2016 DailyDAC, LLC d/b/a/ Financial Poise™ 2

Premier Date: JUNE 22, 2016

POST-CLOSING BUSINESS INTEGRATION

Private Company M&A Boot Camp 2016


meet the faculty

PANELISTS

Lori Anne Czepiel Meister Seelig & Fein

John Levitske Huron Consulting Group,

Commercial Dispute Advisory Services

Paul Valentine KCP Advisory

MODERATOR

Peter Feinberg,

Hoge Fenton


Practical and entertaining education for business owners and executives, accredited investors, and their legal and financial advisors. For more information, visit

www.financialpoise.com

DISCLAIMER:

THE MATERIAL IN THIS PRESENTATION IS FOR INFORMATIONAL PURPOSES ONLY. IT SHOULD NOT

BE CONSIDERED LEGAL ADVICE. YOU SHOULD CONSULT WITH AN ATTORNEY TO DETERMINE

WHAT MAY BE BEST FOR YOUR INDIVIDUAL NEEDS.


http://www.financialpoise.com/

about this webinar

In a perfect deal world, the buyer buys, the seller sells, and

all the shareholders of both buyer and seller live happily

ever after. But the world is not perfect and sometimes

things do not go as planned. Perhaps the seller failed to

disclose some material liability or some other breach of a

rep or warranty. This webinar explores the issues most

likely to lead to litigation, offers tips to avoid them, and gives

a window into what such litigation may look like.


about this series

Corporate transactions (or “deals”) include many types of transactions. One of the most significant

types of transactions a company can enter into is a deal to buy another company or to sell itself. This

type of deal, a M&A (merger and acquisition) deal, typically requires more work from accountants and

attorneys than do many other deals. This webinar series features leading M&A attorneys and other

“deal” professionals speaking at a fairly basic level about key provisions in merger and acquisition

transactions, including those relating to the purchase price, representations and warranties, post-

closing covenants, closing conditions, indemnification and critical boilerplate. All of these issues are

discussed in plain English, and while the series is valuable for seasoned professionals in many fields

(law, accounting, investment banking, etc.) who practice in this area, it is also easily understandable for

business owners who have not previously been through this process.

As with all Financial Poise webinars, each episode in the series is designed to be viewed independently

of the other episodes, and listeners will enhance their knowledge of this area whether they attend one,

some, or all of the programs.


episodes in this series

EPISODE #1 Structuring and Planning the M&A Transaction 1/27/2016

EPISODE #2 Key Provisions in M&A Agreements 2/24/2016

EPISODE #3 The M&A Process

3/23/2016

EPISODE #4 Special Issues in M&A Deals 4/27/2016

EPISODE #5 Negotiating a M&A Deal 6/1/2016

EPISODE #6 Post-Closing Business Integration 6/22/2016

Dates above are premier dates All webinars also available On Demand through West LegalEd Center and Vimeo

8© 2016 DailyDAC, LLC d/b/a/ Financial Poise™

Post-Acquisition Integration = Merging operations, finances,

culture, etc. of acquired business with Buyer



Goal= Synergy

Asset or Equity Deal?

1. Asset Deal

• Does Buyer get Seller’s name?

• Who collects Seller’s A/R?

• Third party consents

2. Equity Deal (other than if merger)

• Does Target entity remain?

If not, issues related to transferring Target’s employees to benefits plans,

stock option plans, result

• Third party consents


General Principles

1. Direction from the top

2. Begins pre-close

3. Move fast before day-to-day business issues overshadow integration efforts

4. Integration Manager (role should ideally start during due

diligence)

5. Role clarity

6. Don’t permit bad behavior


The “First 100 Days”

1. Make decisions & set priorities

2. Communication is key

a) FAQs

b) What stays the same?

a) What changes?


The next 18 months

1. Implement decisions based on priorities

2. Integration teams


Substantive Areas

1. IT

2. Branding

3. Risk management/insurance

4. Legal/compliance


Measuring Success- short term

1. Usable IT system

2. Motivation/engagement

3. Knowledge transfer


Measuring Success- longer term

Retention of…

1. Employees

2. Customers

3. Suppliers


Imperatives For PMI Success According to the Boston Consulting Group

1. Define first principles- the objectives and philosophy of the merger-and design the PMI to reflect them

2. Manage the PMI as a discrete process, separate from the day-to-day running of the business

3. Organize PMI teams to mirror the value drivers of the merger- and staff with the best people

4. Insist on senior leadership that is active, committed, and highly visible


Imperatives For PMI Success According to the Boston Consulting Group (con’t)

5. Maximize cost synergies but plan for revenue synergies as well

6. Define explicit cost and revenue targets and revisit them continually throughout the PMI

7. Retain current customers by making them an integral part of the PMI process

8. Manage talent- by selecting, retaining, and developing the best people for the new organization


Imperatives For PMI Success According to the Boston Consulting Group (con’t)

9. Design a workable organization structure for the combined company

10.Recognize that PMI is an exercise in change management

11.Assume that it is better to have “too much” communication than too little

12.Manage the integration of organization culture with the same discipline and rigor as the operational and financial integration


Earn-out issues?

Is there an earn-out in place, and if so, does it put any constraints on buyer in terms of hiring and firing

employees, amount of CapEx, etc.?


Collection of Accounts Receivable (generally only applicable in an asset purchase)

• Who collects outstanding A/R as between Buyer and Seller?

• Are there restrictions in how collected A/R is to be accounted for?

• Additional payment to Seller as opposed to indemnification right for

Buyer (and if so, subject to cap and basket)?


Post-Closing True-Up/Balance Sheet adjustment

• Who does it and when?

• Right to contest

• Additional payment to Seller as opposed to indemnification right for

Buyer (and if so, subject to cap and basket)?


“Positive” employment- and consulting-related responsibilities

• Employment and consulting agreements

• Difficulty of getting primary shareholders to remain engaged post-

transaction?

• Non-employment and consulting transition services, such as any

assignments, customer and supplier introductions not done pre-closing,

etc.


“Negative” employment and consulting restrictions

• Covenants not to compete

• Restrictions on soliciting employees and customers

• Enforceability concerns?


Breaches of representations and warranties

• Anything in breach at the closing, and if so, is a suit cut off?

• How long are the representations and indemnifications in effect post-

closing?

• Monetary limits (cap and basket)

• Offset rights for Seller for Buyer’s insurance and tax recoveries

• Existing insurance (“occurrence”), tail or express M&A insurance?

• Any reason Buyer might want to not seek indemnification even if it was

or might be so entitled?


More About The Faculty:

D

PETER [email protected]

Peter Feinberg has almost 25 years’ experience representing primarily

middle market companies in all aspects and many sectors of merger and

acquisition transactions. Mr. Feinberg has successfully closed well over

100 merger and acquisition transactions, representing buyers and

sellers, public and privately held companies, multinational firms, family

owned businesses and private equity firms. He practices in Silicon

Valley at Hoge Fenton Jones & Appel, a more than 60 year old, 40+

attorney firm. He has previously been a partner at Thelen Reid & Priest

and Ferrari Ottoboni and has worked in house at NetApp and Clorox.


[email protected]


D

LORI ANNE CZEPIEL

[email protected]

Lori Anne is a partner at Meister Seelig & Fein, LLP.

Lori Anne counsels companies, boards, executives, shareholders and funds on business, fiduciary, governance, activism, strategy,

regulatory compliance, risk management, litigation/dispute resolution, executive compensation, intellectual property, entity formation, US

expansion, corporate, securities and SEC issues. She has 25 years of sophisticated experience leading M&A transactions, private equity

investments, joint ventures, reorganizations, financings, initial public offerings, securities and other capital raising transactions.

A substantial portion of Lori Anne’s practice involves general business counseling. She acts as outside general counsel to cl ients,

providing practical guidance on commercial, compliance, contract and risk management issues in close collaboration with lawyers in

other firm practices (such as IP/technology, real estate, employment/labor, litigation and finance). Lori Anne’s straightforward business-

oriented perspective in part derives from in house experience as acting General Counsel for a global computer products distribution

company, and as a member of the board of directors of an international nonprofit business.

Lori Anne also has deep experience with cross border deals and business spanning 50 countries in Europe, Asia, Latin America and

Canada.

Previously Lori Anne was a partner with an international law firm. She frequently is invited to speak and write about corporate,

governance, securities and other topics (PLI, New York City Bar, American Management Association, S&P, ABA, etc.), and was selected

to serve on the New York City Bar M&A committee for nine years and currently serves on the Emerging Companies committee. She has

been recognized as a Super Lawyer.


mailto:[email protected]


D

JOHN LEVITSKE

[email protected]

John Levitske is a Senior Director in the Commercial Dispute Advisory Services practice of Huron

Consulting Group. He has more than 30 years of experience in business valuation and forensic

accounting. John focuses on complex business valuation, economic damages, and forensic

accounting matters, and the resolution of valuation and accounting disputes arising from M&A

transactions, commercial and shareholder litigation, business divorce, and private company

controversies. He serves as a consultant, expert witness or neutral arbitrator in domestic and

international dispute matters.

Prior to joining Huron, John served in senior positions with international financial advisory and Big

Four accounting firms where he provided expert consulting and testimony in the U.S. and Europe in

depositions and court trials, plus n ICC, SCC, AAA, JAMS, FINRA and ad hoc arbitrations. He also

served as the arbitrator/neutral accountant or appraiser in which he conducted the dispute resolution

process and rendered binding decisions.

In addition, John currently serves as the National Immediate Past President of the Forensic Expert

Witness Association and Vice Chair of the American Bar Association, Business Law Section, Dispute

Resolution Committee. He is also a practitioner member of the New York International Arbitration


[email protected]


D

PAUL VALENTINE

[email protected]

Paul Valentine is a Senior Managing Director at KCP Advisory Group.

He specializes in the management, development and operation of high-quality, fast-growth, small-to-mid-size

organizations. Mr. Valentine brings a diverse industry background to KCP, including roles in healthcare services,

medical devices, retail products and manufacturing. His formal education in accounting and finance is further

enhanced by his corporate roles in sales, operations and product development, as well as a number of officer roles

including the chief executive position. Mr. Valentine focuses his case matters on Performance Improvement and

Corporate Renewal, providing his clients with strategic and marketing advice, while maintaining a solid focus on

financial structure and operational efficiencies.

Mr. Valentine has published many articles and papers. He holds a Bachelor of Science degree in Accounting and a

Master of Business Administration degree in Finance and Entrepreneurship, both from Babson College, Wellesley,

MA. He is a member of the Turnaround Management Association.


[email protected]

EisnerAmper. Let's Get Down to Business®

EisnerAmper LLP is a leading full-service advisory and accounting firm, and is among the largest in the United States. We provide audit, accounting, and tax services, as well as corporate finance, internal audit and risk management, litigation services, consulting, private business services, employee

benefit plan audits, forensic accounting, and other professional advisory services to a broad range of clients across many industries. We work with high net worth individuals, family offices, closely held businesses, start-ups, middle market and Fortune 500 companies. EisnerAmper is PCAOB-registered and provides services to more than 200 public companies and to thousands of entities spanning the hedge, private equity, brokerage and insurance

space in the financial services marketplace. As companies grow we help them reach their goals every step of the way.With offices in New York (NY), New Jersey (NJ), Pennsylvania (PA), California (CA), and the Cayman Islands, and as an independent member of Allinial

Global, EisnerAmper serves clients worldwide.


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Important Notes

• THE MATERIAL IN THIS PRESENTATION IS FOR GENERAL EDUCATIONAL PURPOSES ONLY.

• IT SHOULD NOT BE CONSIDERED LEGAL, INVESTMENT, FINANCIAL, OR ANY OTHER TYPE OF ADVICE ON WHICH YOU SHOULD RELY.

• YOU SHOULD CONSULT WITH AN APPROPRIATE PROFESSIONAL ADVISOR TO DETERMINE WHAT MAY BE BEST FOR YOUR INDIVIDUAL NEEDS.
