1 2014 ACC-SoCal In-House Counsel Conference #IHCC14 What Should Your M&A Attorney be Telling You? January 22, 2014 Los Angeles, California Sponsored by

12014 ACC-SoCal In-House Counsel Conference #IHCC14

What Should Your M&A Attorney be Telling You?

January 22, 2014Los Angeles, California

Sponsored by Sheppard MullinModerator: Will Chuchawat

Panelists: Tammy Brandt

Ron MilkesMatthew Neco

#IHCC12

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#IHCC142014 ACC-SoCal In-House Counsel Conference

What Does “Market” Really Mean?

What’s My Exposure?

Let’s Make a Deal

What Non-Legal Issues Should Your Counsel Raise?

Discussion Topics

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What Should Your M&A Attorney be Telling You?

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Will Chuchawat– Partner, Sheppard Mullin– [email protected]

Tammy Brandt– General Counsel, Service Mesh – [email protected]

Ron Milkes– EVP, Operations, Strategy and Corporate Development for

Endemol North America– [email protected]

Matt Neco – General Counsel, Docstoc, Inc.– [email protected]

Panelists

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Sheppard Mullin at a Glance

Fast FactsAmLaw 100 firm founded in Los Angeles in 1927

625 attorneys practicing in 15 offices worldwide

Represent most of the Fortune 100

Firm’s attorneys ranked in Chambers USA, Legal 500, Best Lawyers in America, Which Lawyer PLC, Super Lawyers, etc.

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The Studies– ABA– Houlihan– SRS

What Does Market Really Mean?

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Be wary with those statistics and those that spout them


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A deal looks different if your company looks like this…


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versus this


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A $50 million deal is different than a $500 million deal


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Private equity buyers and strategic buyers are two different animals


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Asset deals vs stock deals vs mergers vs recaps vs minority deals vs healthy deals vs distressed deals vs technology deals vs A&D deals vs healthcare deals vs …


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How much exposure for the Seller?– Reps and warranties– Covenants– Retained liabilities– Caps– Baskets– Survival– Third party recovery – Net of taxes– Mitigation – Require maintenance of insurance– Release


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How much exposure (coverage) for the Buyer?– Due diligence– Your watch, our watch– Reps and warranties

Sandbagging

– Covenants– Assumed liabilities– Consequential, loss of profit/revenue, multiplier

damages– Legal opinion


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Buyer coverage/exposure continued– Non-compete/Non-solicit/Non-disparagement– A/R – Inventory– Fraud– FCPA


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Do I have to close?

arrangement of satisfactory financing

retention

compliance with bulk sales laws

receipt of favorable tax rulings

confirmation of outstanding equity securities

receipt of fairness opinions from investment bankers

title policies for significant real estate

an environmental audit

certain regulatory actions


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Let’s Make a Deal

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Flying Solo

Let’s Make a Deal

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Let’s Make a Deal

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When (why) do I call my lawyer?

Let’s Make a Deal

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When (why) do I call my lawyer?– Planning– Deal team– Banker engagement letters– Exclusivity– Working Capital/Net Assets/Minimum Inventory/Cash– Escrow/Holdback– Promissory notes– Rollover– Earnout– 338(h)(10)– Purchase Price Allocation

Let’s Make a Deal

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Let’s Make a Deal

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I’m not a banker, but you should talk to one.

Let’s Make a Deal

Phase Due Diligence Preparation Marketing / Solicitation Negotiation Closing

Conduct Due Diligence

Prepare Marketing Materials

Prepare Acquiror / Investor List

Contact Investors

Collect Confidentiality Agreements

Distribute Marketing Materials

Solicit Indications of Interest

Acquiror Due Diligence

Solicit and Receive Final Bids

Negotiate Purchase Agreement

Obtain Necessary Approvals

Sign and Close Transaction

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I’m not an accountant, but you should talk to one.

Let’s Make a Deal

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What do I need to do to win the bid?

What do I need to do to close the deal?

Let’s Make a Deal

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What type of negotiator are you?

What type of negotiator is your lawyer?

Let’s Make a Deal

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What’s really a deal killer?

Let’s Make a Deal

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Legal issues vs business issues

What Non-Legal Issues Should My Counsel Raise With Me?

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What happens if XYZ happens?– Loss of key customers

– Loss of key suppliers

– Loss of key employees (including the seller)

– Litigation

What happens if XYZ does not happen? – Approval of the transaction

– Approval needed for the business


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Rep and warranty insurance

Insurance impact

Employment agreements/policies

Benefit plans


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IT

How does this effect your loan covenants?

SEC reporting requirements?

Third party shareholder representative

Escrow provider


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What’s market depends on the circumstances

It’s not rocket science, it’s a full contact sport

You don’t play contact sports alone

Call your lawyer early on

Take-Away Points

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Speaker Biographies

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Tamara Brandt

She has extensive experience in sophisticated corporate legal matters, including a background in mergers and acquisitions, private equity, and marketing. Ms. Brandt also currently serves on the Executive Committee and Board of Directors of the Southern California Chapter of the Association of Corporate Counsel (ACC-SoCal).

Vice President, General Counsel and Corporate Secretary Computer Sciences Corporation (310) [email protected]

She was previously Managing Counsel at Toyota Motor Sales, U.S.A. where she was involved in marketing-related transactions, complex corporate matters, and support for the racing division. Prior to that, Ms. Brandt worked as a corporate attorney at Jones Day and Sheppard Mullin Richter & Hampton LLP where she handled public and private acquisition transactions and related corporate and finance matters.

She has extensive experience advising high growth technology companies on a broad range of legal issues. She is a graduate of Notre Dame Law School and Bluffton University.

Tammy Brandt served as Vice President, General Counsel and Corporate Secretary of ServiceMesh, Inc., an enterprise grade cloud management software company with a worldwide presence until they were acquired by Computer Sciences Corporation in November 2013. Tammy now is CSC’s chief counsel for global mergers and acquisitions.

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Will Chuchawat

Will Chuchawat does M&A all day, every day.

He is a partner in the firm's Corporate Practice Group, where he advises public and private companies in the areas of mergers and acquisitions, private equity, middle market deals, Chinese investment, corporate finance and general business matters.

Mr. Chuchawat is an advisor to clients ranging from multi-national corporations to private equity groups to entrepreneurs in various industries, such as A&D, financial services, technology, healthcare,manufacturing, construction and nonprofits.

PartnerSheppard MullinCorporate & Securities Practice(213) [email protected]

Mr. Chuchawat will be respectable until he hits 40:

Mr. Chuchawat was named one of the "40 Under 40" by The M&A Advisor

The Daily Journal named him one of the top 20 attorneys under 40 in California.

The Recorder named him one of the 50 Lawyers on the Fast Track in California.

Mr. Chuchawat holds a J.D. from the University of Chicago; and a B.A. summa cum laude from the University of Wisconsin, Madison.

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Ron Milkes

Ron Milkes is Executive Vice President, Operations, Strategy and Corporate Development for Endemol North America. In this position, Milkes guides the entertainment company's operations and corporate development activities in North America, including overseeing day-to-day operations, Endemol subsidiaries in North America, studio investments, mergers and acquisitions, joint ventures, new business development, and strategic planning.

Senior Vice PresidentEndemol USA Inc.Corporate Development(310) [email protected]

He supervises Endemol North America's digital team. Milkes facilitated the acquisition of a number of Endemol USA's subsidiaries, including Authentic Entertainment ("Here Comes Honey Boo Boo"), 51 Minds ("Flavor of Love"), and Original Media ("Swamp People"). Prior to joining Endemol USA in 2007, Milkes was Executive Vice President of Operations and General Counsel for Control Room/Live Earth. Prior to that, he served as general counsel and served on the Board of Directors at The Firm..

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Matthew A. Neco

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Matt has worked for entertainment, media and technology entities, including a music preference matching internet company he co-founded. He focuses and has focused on various aspects of business, technology, the internet, evolving media, the entertainment industry, certain civil rights, as well as IP and business litigation, and reorganizations, work-outs, and acquisitions in Bankruptcy Courts.

CPA, CA, PartnerPractice Leader, Transaction Services(415) [email protected]

He has taught IP Licensing Law at Pepperdine University School of Law, is a certified mediator, and has been a member of the mediation panel of the U.S. Bankruptcy Court for the Central District of California since 1995.

He was a member of the Executive Committee of the Intellectual Property Section of the State Bar of California, and is the founding Chair of its In-House Counsel Interest Group and former Chair and now secretary of its Copyright IG. Matt is also active with the Association of Corporate Counsel.

Matt likes to swim and bicycle and asks that you not text and drive.

Matthew Neco is General Counsel for Docstoc, Inc. - formerly a venture backed start-up and now part of the Intuit Inc. family - based in Santa Monica, California, that provides small business owners and operators with resources to start, manage, and grow their business. He was formerly GC for a now defunct company, and its subsidiaries, including the developer and distributor of Morpheus, the peer-to-peer file sharing application, which was a party in the MGM / Grokster case. 1

1 Metro-Goldwyn-Mayer Studios, Inc. et al. v. Grokster, Ltd., et al., 259 F. Supp. 2d 1029 (C.D. Cal. 2003), aff’d, 380 F.3d 1154 (9th Cir. (Cal.) 2004), vacated and remanded, 125 S. Ct. 2764, 545

U.S. 913, 162 L.Ed.2d 781, 2005 WL 1499402, 2005 U.S. Lexis 5212 (U.S. Jun 27, 2005).

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11th Annual In-House Counsel ConferenceJanuary 29, 2014 (Los Angeles, CA)

#IHCC1441

www.acc.com/chapters/socal/

Documents

1 2014 ACC-SoCal In-House Counsel Conference #IHCC14 What Should Your M&A Attorney be Telling You? January 22, 2014 Los Angeles, California Sponsored by