Post-Closing Issues (Series: Private Company M&A Boot Camp)

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Practical and entertaining education for
attorneys, accountants, business owners
and executives, and investors.
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DISCLAIMER
The material in this webinar is for informational purposes only. It should not be
considered legal, financial or other professional advice. You should consult with an
attorney or other appropriate professional to determine what may be best for your
individual needs. While Financial Poise™ takes reasonable steps to ensure the information
it publishes is accurate, Financial Poise™ makes no guaranty in this regard.
About this PowerPoint: if you are looking at this PowerPoint without the benefit of
listening to the conversation that surrounded it then you are doing yourself a disservice.
This PowerPoint was prepared in contemplation of being viewed in conjunction with
listening to a one hour webinar on the topic
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MEET THE FACULTY
Moderator:
Robert Londin – Jaspan Schlesinger LLP
Panelists:
Peter Feinberg – Law Office of Peter Feinberg
Jacqueline Brooks – Saul Ewing Arnstein & Lehr LLP
Phil Buffington – Adams and Reese LLP
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ABOUT THIS WEBINAR: Post-Closing Issues
The deal is complete, and the parties have finished the hard work. Or have they?
Integration planning turns to execution as people, processes, and technology are
combined once the deal is legally closed. The buyer will need to consider the purchased
business or assets from the standpoint of employees, IT, customers, suppliers, and a
multitude of other areas. In addition, numerous post-closing legal issues may arise,
including purchase price adjustments, breaches of representations and warranties,
enforcement of key negative employment-related covenants and restrictive covenants,
collection of pre-closing accounts receivable, earn-outs, and true-ups of final
financials. This episode guides listeners through the process, timing, and issues which
most commonly arise after the closing of deals.
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ABOUT THIS SERIES: Private Company M&A Boot Camp
Corporate transactions (or “deals”) include many types of transactions. Viewed broadly, a deal can be a very
small matter such as drafting a purchase order, a non-compete agreement, or a myriad of other single purpose
agreements necessary to document a legal relationship between two parties and extend to large multi-national
acquisitions and financings. One of the most significant types of transactions a company can enter into, however,
and the type that is commonly thought of as needing a “deal” lawyer, is a Mergers and Acquisitions transaction.
M&A (mergers and acquisitions), viewed broadly, includes buying or selling all or part of a business or company,
as well as business combinations, such as mergers. Such “deal” work commonly requires attorneys, accountants,
intermediaries (i.e. investment bankers and business brokers) to work together. This 2019 PRIVATE COMPANY
M & A BOOT CAMP webinar series features leading M&A attorneys and other deal professionals speaking about
private company M&A in roughly chronological order, guiding the audience through a conversation that spans
from deal origination, the LOI (letter-of-intent) or term sheet, due diligence, document drafting and negotiation,
closing, and post-closing. Issues addressed include tax planning and structure; corporate governance;
negotiating deal points and common pitfalls and challenges; closing conditions; representations and warranties;
indemnification provisions; earn-outs; restrictive covenants; antitrust; intellectual property; and employment.
While many of the topics covered apply also to public company M&A, the focus of this webinar series is on M&A
involving a privately owned company or business.
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EPISODES IN THIS SERIES
8/6/19 Episode #1: Structuring and Planning the M&A Transaction
9/10/19 Episode #2: Key Provisions in M&A Agreements
10/15/19 Episode #3: The M&A Process
11/12/19 Episode #4: Post-Closing Issues
12/10/19 Episode #5: Negotiating an M&A Deal
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Dates shown are premiere dates.
All webinars will be available
On Demand approximately 4 weeks
after they premiere.

Episode #4:
Post-Closing Issues
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Post-Acquisition Integration = Merging
operations, finances, culture, etc. of
acquired business with Buyer
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Goal=Synergy
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ASSET OR EQUITY DEAL
• Asset Deal
 Does Buyer get Seller’s name?
 Who collects Seller’s A/R?
 Third party consents
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ASSET OR EQUITY DEAL (CON’T)
• Equity Deal (other than if merger)
 Does Target entity remain?
o If not, issues related to transferring Target’s employees to benefits
plans, stock option plans, result
 Third party consents
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GENERAL PRINCIPLES
• Direction from the top
• Begins pre-close
• Move fast before day-to-day business issues overshadow integration efforts
• Integration Manager (role should ideally start during due diligence)
• Role clarity
• Don’t permit bad behavior
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THE “FIRST 100 DAYS”
• Make decisions & set priorities
• Communication is key
• What communications will Seller/Target permit prior to closing?
 FAQs
 What stays the same?
 What changes?
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THE NEXT 18 MONTHS
• Implement decisions based on priorities
• Integration teams
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SUBSTANTIVE AREAS
• IT
• Branding
• Risk management/insurance
• Legal/compliance
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MEASURING SUCCESS SHORT TERM
• Usable IT system
• Motivation/engagement
• Knowledge transfer
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MEASURING SUCCESS LONGER
TERM
• Retention of…
 Employees
 Customers
 Suppliers
 Physical facilities/workforce economies of scale
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IMPERATIVES FOR PMI SUCCESS
ACCORDING TO THE BOSTON
CONSULTING GROUP
• Define first principles- the objectives and philosophy of the merger- and design the
PMI to reflect them
• Manage the PMI as a discrete process, separate from the day-to-day running of the
business
• Organize PMI teams to mirror the value drivers of the merger- and staff with the best
people
• Insist on senior leadership that is active, committed, and highly visible
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CONSULTING GROUP (CONT’D)
• Maximize cost synergies but plan for revenue synergies as well
• Define explicit cost and revenue targets and revisit them continually throughout the
PMI
• Retain current customers by making them an integral part of the PMI process
• Manage talent- by selecting, retaining, and developing the best people for the new
organization
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CONSULTING GROUP (CONT’D)
• Design a workable organization structure for the combined company
• Recognize that PMI is an exercise in change management
• Assume that it is better to have “too much” communication than too little
• Manage the integration of organization culture with the same discipline and
rigor as the operational and financial integration
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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.?
• Does the main acquisition agreement provide for any Buyer
covenants with respect to the earn-out (good faith and fair dealing;
seller consent rights; limitations/adjustments based on post-closing
for other acquisitions or dispositions)
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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)?
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POST-CLOSING TRUE-UP/BALANCE
SHEET ADJUSTMENT
• Who does it and when?
• Right to contest; dispute resolution
• Additional payment to Seller as opposed to indemnification right for Buyer (and
if so, subject to cap and basket)?
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“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.
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“NEGATIVE” EMPLOYMENT AND
CONSULTING RESTRICTIONS
• Covenants not to compete
• Restrictions on soliciting employees, customers and business relations
• Enforceability concerns?
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BREACHES OF REPRESENTATIONS
AND WARRANTIES
• Anything in breach at the closing, and if so, is a suit cut off?
• How long do the representations and warranties survive after closing?
• Are there non-monetary limitations on indemnification claims (for example,
obligation to mitigate damages or pursue insurance)?
• Monetary limits (cap and basket)
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BREACHES OF REPRESENTATIONS
AND WARRANTIES (CON’T)
• Offset rights for Seller for Buyer’s insurance and tax recoveries
• Existing insurance (“occurrence”), tail or express M&A insurance?
• Analysis of tax benefit (loss) to otherwise indemnifiable losses
• Any reason Buyer might want to not seek indemnification even if it was or might
be so entitled?
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ABOUT THE FACULTY
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Robert Londin – rlondin@jaspanllp.com
A partner in his firm’s Corporate and Commercial Transactions Group, Mr. Londin counsels
numerous companies in connection with their mergers and acquisitions (both strategic and
financial), financing needs and the execution of their business plans; financial concerns in capital
markets transactions; emerging-growth companies; seed and venture capital clients in connection
with the formation of their investment vehicles and making of their portfolio company investments;
borrowers and lenders in secured financings; and companies and highly compensated executives in
connection with their compensation and separation arrangements.
Rob serves as general counsel to many clients and their senior executives and advisory boards. This
general corporate representation covers day-to-day legal issues as well as strategic planning and
business development extending to acquisition and financing concerns. He also represents
technology and emerging-growth clients in connection with their strategic alliances, technology
licensing, mergers and acquisitions, corporate finance, venture capital, banking transactions and
general corporate needs.
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Peter Feinberg – peterdfeinbergesq@gmail.com
Peter Feinberg has more than 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 at the Law Office of Peter
Feinberg. He was previously Of Counsel at Hoge Fenton Jones & Appel, was a partner at
Thelen Reid & Priest and Ferrari Ottoboni, and was in house counsel at NetApp and
Clorox.
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Phil Buffington – Phil.Buffington@arlaw.com
Phil Buffington joined Adams and Reese in 2011 and serves as Leader of the Financial Services Team, and is a Partner
in the Transactions Practice Group. For more than 30 years, Phil has served as a trusted advisor to community,
regional and national financial institutions, and he routinely helps these institutions assess and analyze regulatory and
litigation risks, including issues involving: Corporate governance, Mergers, acquisitions, branching and divestitures,
Strategic Planning and Capital Planning, Risk assessment, management and mitigation (to list a few).
Phil also has substantial experience in the following: Advising boards of directors of financial institutions with regard
to their duties and responsibilities, Advice and counsel on financial institution litigation involving director and officer
actions, Teaching and conducting seminars for numerous organizations related to topics of interest in the financial
institution industry.
In the legal arena, Phil is a member of various sections within the American Bar Association, including the Banking
Law Committee. He is also a member of the Business Law Section of the Mississippi Bar Association.
Phil is an adjunct professor at Mississippi College School of Law (Banking Law and Business Planning), and is a faculty
member for the Mississippi Bankers Association School of Banking (Commercial Loan Documentation I and II). He
earned his J.D. from Mississippi College School of Law in 1984 and attained a double major in banking and
finance/insurance at University of Mississippi, earning a B.B.A. in 1981.
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Jacqueline Brooks – jacqueline.brooks@saul.com
Jacqueline Allen Brooks concentrates her practice in general business and commercial law.
She counsels clients in mergers and acquisitions, purchases and sales of businesses,
commercial finance, private offerings of debt and equity securities, and life science
transactions, and shareholder derivative matters, including shareholder demand responses
and special committee issues. Jacqueline has experience representing public companies,
privately owned and managed companies, nonprofit organizations and start-up companies
and provides general counsel to these organizations regarding corporate matters. Prior to
joining Saul Ewing Arnstein & Lehr, Jacqueline participated in Washington University
School of Law’s D.C. Clinic, through which she was an intern to the United States House
Judiciary Committee. In this capacity, she drafted legal memoranda to assist Congressman
John Conyers, Jr. and the Congressman’s legislative assistants at Judiciary Committee
hearings and briefings.
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QUESTIONS OR COMMENTS?
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IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily
for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education.
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ABOUT FINANCIAL POISE
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business owners and executives, and investors. Its
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