Tag Archives: corporate law

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Scottsdale League for the Arts Appoints Board Member

Susan E. Wells, partner of business law firm Jaburg Wilk, has been appointed to the Board of Directors of the Scottsdale League for the Arts.

The Scottsdale League for the Arts is a non-profit volunteer organization supporting artists, arts programs and education through fundraising and special events, including the Scottsdale Culinary Festival. Funds raised are granted to arts-focused organizations.

Wells has been a member of the organization for three years and has been actively involved for five. In April 2013, she chaired the VIP Passport to the Picnic Experience at the Scottsdale Culinary Festival. She founded and chaired the “Take the Cake Competition,” a cake decorating contest for professionals and culinary art students that showcased participant’s creativity and talents to top pastry chefs and Wine Country Brunch guests. In 2014, she will co-chair the “Friends of James Beard Benefit Dinner,” a culinary feast prepared by several James Beard award-winning chefs and held at the Westin Kierland Resort and Spa.

“The Scottsdale League for the Arts has issued millions of dollars of grant money to arts-focused organizations over its 35-year history,” said Wells. “This past year has been one of the League’s best years in terms of fundraising. I look forward to working with Jerry McMahon, the incoming President, and the League directors and members in making 2014 an even better year by enhancing the League’s legacy and positively impacting the community.”

Wells is an attorney at Phoenix Business law firm Jaburg Wilk. Practice areas include Business/Corporate law, Franchise law, Healthcare law and Employment law. She is a 2008 Super Lawyer, listed in Best Lawyers of America, named 2012 Best Lawyers in Franchise Law and named 2013 Lawyer of the year by Best Lawyers. Wells has achieved the Martindale Hubbell AV Preeminent® peer review rating, the highest rating in legal ability and ethical standards.

Goldwater Institute

2013 Top Lawyers list: Business/corporate law

Az Business magazine’s 2013 top lawyer list was created after the editorial department asked Arizona law firms to nominate their two best attorneys from 16 different categories for consideration. Those nominees were put on a ballot and were voted on by their peers in the legal community and the readers of Az Business magazine to determine the exclusive 2013 Az Business Magazine Top Lawyers list.

Jessica Benford
Ryley Carlock & Applewhite
602-440-4866
www.rcalaw.com
Benford counsels clients regarding general corporate representation, including corporate formation and governance. She also handles securities enforcement and regulation matters.

Charles E. Davis
Davis Miles McGuire Gardner, PLLC
480-733-6800
www.davismiles.com
Davis has an “AV Preeminent” rating by the Martindale-Hubbell Peer Review Ratings system, which connotes the highest possible rating in both legal ability and ethical standards.

Gerald Gregory Eagleburger
Sanders & Parks, P.C.
602-532-5692
www.sandersandparks.com
Eagleburger’s practice includes all types of transactional, commercial/business and personal asset matters, including formation and governance of corporations, partnerships and limited liability companies.

Stephanie Fierro
The Frutkin Law Firm, PLC
602-606-9300
www.frutkinlaw.com
Fierro’s practice focuses on general counsel business law and estate planning. She brings the firm a wide range of experience and interests including all aspects of corporate transactional work, estate planning, and tax representation.

Jonathan B. Frutkin
The Frutkin Law Firm, PLC
602-606-9300
www.frutkinlaw.com
Frutkin is the principal attorney at The Frutkin Law Firm and brings areas of expertise in the practice areas of corporate and business law, corporate bankruptcy, and commercial litigation.

Phillip Guttilla
Polsinelli
602-650-2327
www.polsinelli.com
Guttilla Guttilla serves as general corporate counsel to his clients ranging from emerging growth companies to multi-national enterprises.

Gregory R. Hall
DLA Piper
480-606-5128
www.dlapiper.com
Hall regularly counsels clients on a broad range of corporate, securities and business-related matters and matters affecting corporate policy and strategy, including directors’ duties and responsibilities and other aspects of corporate governance.

Travis J. Leach
Jennings Strouss
602-262-5806
www.jsslaw.com
Leach focuses his practice in the area of corporate, securities, and finance. He also helps lead the firm’s Sports and Entertainment practice, coinseling professional athletes, coaches, entertainers, and ownership groups.

Brian Moll
Polsinelli
602-650-2302
www.polsinelli.com
Moll practices in the areas of corporate law, mergers and acquisitions, and commercial contracts. He has extensive experience in assisting businesses in all stages of their operations, from start-up to a mature business.

Robert A. Royal
Tiffany & Bosco, P.A.
602-255-6011
www.tblaw.com
Royal’s practice emphasizes intra-corporate dispute and director, officer and manager liability issues.

Terence W. Thompson
Gallagher & Kennedy, P.A.
602-530-8515
www.gknet.com
Thompson’s practice emphasizes corporate business acquisitions; public-private projects, including strategic joint ventures; Native American enterprises and projects; water/wastewater infrastructure development; sports facility financing; and physician-hospital contracts.

Nancy White
Steptoe & Johnson LLP
602-257-5213
www.steptoe.com
White’s practice emphasizes international and domestic transactions, including mergers and acquisitions, purchases and sales of capital assets and real property, project finance, asset-based financings, asset securitizations, and private placements of debt and equity securities..

ipo

Advantages and disadvantages of an IPO

The closing concludes and a company suddenly has $50 million cash in its bank account from the sale of its stock.  Champagne corks are popped and celebration ensues―for a brief period.  “Going public” is an exciting event for all involved and may provide many advantages to the company’s operations.  However, being a public company has certain disadvantages that should also be considered.

“Going public” refers to a sale of stock or debt in an initial public offering or IPO registered with the Securities and Exchange Commission (SEC).  A “public company” refers to a company that has undertaken an IPO or is otherwise required to be a reporting company under the Securities and Exchange Act.  A “private company” typically has a limited number of owners or investors and is not required to file reports with the SEC.  This article discusses some of the advantages and disadvantages of “going public.”

Advantages of an IPO

An IPO and the result of being a public company may provide significant advantages to the company and its stockholders.  These include cash infusion, ability to “mint coin,” easier future access to equity and debt markets, liquidity for pre-IPO stockholders and institutionalization of the company.  The common theme of these advantages is that a liquid market for its stock “unlocks” value that the company could not otherwise access.  By having publicly traded stock, the discount that is attached to stock of private companies no longer applies.

Cash Infusion The result of an IPO is a significant and immediate infusion of cash into the company.  This cash is typically “earmarked” for specific items described in the IPO disclosure documents, which can be for a variety of purposes.  For example, the company may use the proceeds of the IPO to expand its inventory, property and equipment base, reduce debt, further research and development or expand its services.

Minting of Coin. Having an established value and liquid market for its stock creates additional “coin” for the company through issuance of additional stock.  This “coin” may be used as consideration to acquire other business and to compensate both current and future employees.

The ability to utilize the company’s stock for an acquisition significantly decreases its cash needs and allows it to engage in transactions without tapping into its “war chest” of IPO proceeds, which can be put to use to fund future growth.  In addition, acquisitions using the company’s stock as consideration may be structured as a “tax-free” reorganization, which can allow the sellers to defer taxes on gains associated with the sale of their business.  Using stock as consideration for acquisitions also provides sellers an opportunity to participate in the future growth of the combined organization.

Another benefit of a liquid market for a public company’s shares is that its stock may be used to compensate both its existing and future employees through the grant of options or direct issuance of shares.  Grants of options or stock provide a means to share the company’s success and are a great tool for attracting talented management and employees.

Access to Capital Markets.  Being a public company enhances access to both equity and debt markets.  After the company has been a reporting company for 12 months, it may engage in follow-on offerings using a “short form” registration process.  The ability to use this process reduces both the time and expense of future equity financings.

As a reporting company, the transparency of its financial position and operations makes it better suited to obtain debt financings.  The infusion of cash from an IPO also enhances the balance sheet and makes the company a much stronger candidate for debt financings.

Liquidity An IPO provides liquidity to the company’s founders, employees and pre-IPO investors holding the company’s stock.  While the liquidity may not be immediately realized due to “lockup” requirements imposed by underwriters and other SEC rules, being a public company provides a means for the pre-IPO stockholders to monetize the value of their stock at some point in the future.

Institutionalization.  Being  publicly traded  adds to a company’s stature as an institution, which can enhance its competitive position.  The IPO process itself generates publicity that may enhance the company’s recognition in the marketplace.  As a result, suppliers, vendors and lenders often perceive the company as a better credit risk and customers may perceive it as a better source of products or services.  The stature of a public company can also enhance its ability to attract top level executives and employees.

Disadvantages of an IPO

While going public provides significant advantages to a company and its stockholders, the requirements imposed by securities laws produce disadvantages to the company and its operations.  These include increased costs, securities law compliance, changes in corporate governance structure and becoming a “slave to the stock price.”

Costs.  The costs of an IPO include both the costs of engaging in the offering process and the future costs of being a reporting company.  Typical costs of raising $50 million through the IPO process can range from $3.5 million to $5 million.  Raising less money can increase the percentage of offering costs significantly.  These costs include underwriting commissions, legal and accounting fees, SEC and National Association of Securities Dealers (NASD) filing fees, exchange fees, financial printing, travel and other miscellaneous costs related to the offering.  In addition to these initial costs, as a reporting company subject to securities laws, including Sarbanes-Oxley, and exchange listing requirements, the company will have significant ongoing costs associated with its operations.  These costs include outside directors’ fees and expenses, directors’ and officers’ liability insurance, accounting and legal costs, internal control costs, printing costs for stockholder reports and proxies and costs of investor relations.  According to a survey published by Foley & Lardner LLP, these costs average approximately $2.37 million per year, not including lost productivity costs, for public companies with revenue under $1 billion.

The costs are not just monetary.  The IPO process can take up to six months or longer.  During this period the company’s executive management team must devote substantial time and energy to the IPO.  This takes away from management’s time and ability to run the company’s business, and operations may suffer during the IPO process.

Securities Law Compliance A myriad of compliance issues results from an IPO.  The IPO process imposes severe restrictions on the company’s marketing and publicity activities during the “quiet period” preceding the filing of a registration statement.  The registration and reporting process involves the disclosure of significant information about the company that is readily available to the company’s competitors.  Following completion of the IPO, the company will be required to file quarterly, annual and current reports detailing its operations and announcing major events.  This disclosure includes detailed information about operations, executive compensation, financial results and significant customers and vendors.  Proxy statements must be filed with the SEC before a stockholders meeting can be called.  The company cannot release information on a selective basis and must be careful to assure that the information it releases is accurate and complete.  Company insiders and major stockholders also must comply with the Exchange Act requirements for reporting their stock ownership and prohibitions on short swing trading.  Finally, the exchanges where the company’s stock is traded have various listing standards that impose additional governance and disclosure requirements.

The changes to the securities laws resulting from the Sarbanes-Oxley Act have greatly increased the compliance issues that a public company must meet (with corresponding cost increases).  These include enhanced auditing and governance standards, additional responsibilities for the company’s independent directors, development and documentation of control procedures and certifications by the CEO and CFO.  The certification requirements are backed up by possible criminal sanctions for violations.

Change in Corporate Governance Structure A listing requirement of the major stock exchanges is that the company’s board be comprised of a majority of independent directors.  Independent directors cannot be officers, employees, major stockholders or outside service providers.  Independent directors must comprise the audit, compensation and corporate governance committees.  This means that the duties of selection and oversight of auditors, setting executive compensation and determining board candidates and litigation issues are taken away from management and given to “strangers” that may have little past experience with the company’s operations.  Another listing requirement is holding annual stockholder meetings.  Matters such as calling meetings and presenting proposals to stockholders must now be accomplished in compliance with SEC rules.

A major change brought about by Sarbanes-Oxley was empowerment of the independent directors.  Previous “best practices” of having a majority of independent directors are now mandated by exchange listing requirements.  The independent directors are charged with oversight of the company’s management and auditors.  For most companies, particularly where the founders are executive management, the change in corporate governance structure resulting from being a public company may take some adjustment.

Becoming a Slave to the Stock Price It is often said that a professional baseball pitcher is only as good as his last outing and that a CEO of a public company is only as good as her company’s last quarter.  While a fluid and liquid market in a company’s stock unlocks value, a public company’s stock price is frequently subject to rapid fluctuation.  The stock price can be affected by a variety of factors, over which management may have little or no control.  Reporting of quarterly earnings can lead to decision making based on the short term result when a longer term perspective would be better for the company.  The close ties between executive compensation and their personal net worth to operating results enhances the dilemma of seeking short-term results at the sacrifice of long-term perspective.  Wall Street can be impatient and, as with baseball pitchers, may have a tendency to look only to immediate past results rather than the big picture.

A loss of stock value can lead to dire consequences, such as stockholder lawsuits, loss of confidence in management and possible hostile takeovers.  Lawsuits can stem from a sudden decline in stock price.  A stockholder lawsuit can be very costly and distract management from running the business.    Recently stockholder activism has been on the rise and dissatisfaction with directors (including executive management on the board) has been evidenced by stockholders withholding approval of directors.  Various proposals, such as mandatory removal of directors that do not win a majority of stockholder approval in elections, are increasing the pressures on management to perform on a quarterly basis.  If a company loses favor with analysts and stockholders, its stock may suffer additional devaluation, which could lead to it becoming attractive to a hostile takeover bid.  A successful takeover, particularly a hostile takeover, could result in the company’s founders being removed from management positions.

Conclusion

While going public can have many positive effects on a company and its operations, these positive effects must be balanced against the disadvantages.   Going public drastically changes a company’s culture and has an ongoing impact on business operations.  Determining if going public is the right course for a company to pursue is a major decision and must be carefully considered by management before this course is taken.

 

Thomas Morgan is a partner in Lewis and Roca’s (www.lrlaw.com) Phoenix office in Phoenix, Arizona. He practices securities, corporate and tax law with an emphasis in public and private securities offerings, private equity fundings, mergers and acquisitions, regulatory compliance, and general tax planning. He can be reached at 602.262.5712  or TMorgan@LRLaw.com

justice.scales.and.gavel

Arizona’s Top Lawyers – 2012 Banking & Business/Corporate Law

Arizona Business Magazine used its own research, solicited input from legal experts, and referenced professional ratings and rankings to determine the legal professionals who made the 2012 Top Lawyers list.


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Categories

BankingHealthcare
Business/Corporate LawIntellectual Property
Construction LitigationMergers and Acquisitions
Employment/Labor
Relations
Real Estate
Environmental LawSecurities and Corporate Finance
Estate and Trust LitigationTax

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BANKING

Michael A. Bosco ◆ Tiffany & Bosco
602-255-6002 ◆ tblaw.com
Bosco represents more than 40 top banks and mortgage lenders — including Freddie Mac and Fannie Mae — and private mortgage insurance companies.

Mark S. Bosco ◆ Tiffany & Bosco
602-255-6006 ◆ tblaw.com
Bosco is a lecturer at regional and national mortgage banking and default servicing seminars, and he has published numerous articles on mortgage banking, default servicing and related topics.

Scott DeWald ◆ Lewis and Roca
602-262-5333 ◆ lrlaw.com
DeWald’s practice focuses on the legal needs of high-tech, e-commerce and emerging companies and limited liability companies.

Dean Dinner ◆ Nussbaum Gillis & Dinner, P.C.
480-609-0011 ◆ nussbaumgillis.com
Negotiated and documented DIP financing transactions for both factoring companies and asset based lenders.

Richard Goldsmith ◆ Lewis and Roca
602-262-5341 ◆ lrlaw.com
Goldsmith practices primarily in the areas of lending, equipment leasing and sales, real estate, and general contract drafting.

W. Scott Jenkins ◆ Ryley Carlock and Applewhite
602-440-4890 ◆ rcalaw.com
Jenkins is a member of the fi rm’s Bankruptcy and Creditor’s Rights, Real Estate, Litigation, and Transportation practice groups.

Thomas E. Littler ◆ Gordon Silver
602-256-0400 ◆ gordonsilver.com
Littler represents debtors and creditors, trustees, official committees, and secured creditors in reorganizations in a wide range of industries.

Jared Parker ◆ DeConcini McDonald Yetwin & Lacy, P.C.
602-282-0500 ◆ deconcinimcdonald.com
Parker focuses on business restructuring and bankruptcy, litigation and creditors’ rights.

John Randolph ◆ Sherman & Howard
602-240-3000 ◆ sah.com
Randolph represents lenders in connection with workouts, prejudgment strategy and remedies and trustee’s sales foreclosures.

William G. Ridenour ◆ Ridenour, Hienton & Lewis
602-254-9900 ◆ rhkl-law.com
Ridenour’s practice emphasizes transactional, banking and corporate law.

Gil Rudolph ◆ Greenberg Traurig, LLP
602-445-8206 ◆ gtlaw.com
Rudolph representats finance companies, mortgage lenders, banks, title insurance companies and other consumer financial service providers.


BUSINESS/CORPORATE LAW

Mark Barker ◆ Jennings, Haug & Cunningham, LLP
602-234-7828 ◆ jhc-law.com
Barker has a busy commercial transaction practice representing financial institutions and Arizona small businesses, commercial litigation practice with an emphasis on surety law, construction law and business dispute resolution.

Edwin D. Fleming ◆ Burch & Cracchiolo, P.A.
602-234-9921 ◆ bcattorneys.com
Fleming has successfully prosecuted and defended professionals, including lawyers and accountants, in cases involving high-stakes financial fraud and securities issues.

Dan Garrison ◆ Andante Law Group
480-421-9449 ◆ andantelaw.com
In 2007, Garrison received the “Turnaround of the Year” Award from the Arizona Chapter of the Turnaround Management Association.

Larry A. Hammond ◆ Osborn Maledon
602-640-9361 ◆ omlaw.com
Hammond served as an Assistant Watergate Special Prosecutor in 1973- 1974. One of his specialities is commercial litigation.

John L. Hay ◆ Gust Rosenfeld PLC
602-257-7468 ◆ gustlaw.com
Hay practices general corporate and commercial law, with emphasis on representing small- and medium-sized businesses.

John A. Klecan ◆ Renaud Cook Drury Mesaros, PA
602-307-9900 ◆ rcdmlaw.com
Klecan has been involved in precedent-setting products liability litigation, in Arizona and other jurisdictions.

P. Robert Moya ◆ Quarles & Brady
602-230-5580 ◆ quarles.com
Moya’s practice focuses on middle-market and emerging entrepreneurial and growth companies.

Brett Johnson ◆ Snell & Wilmer
602-382-6312 ◆ swlaw.com
Johnson’s practice includes representation in business, export, government contracting, and health care matters.

Michael Manning ◆ Stinson Morrison Hecker LLP
602-212-8503 ◆ stinson.com
Manning’s practice focuses on antitrust, business litigation, class actions, business litigation, governance, risk and compliance.

Kevin Olson ◆ Steptoe & Johnson
602-257-5275 ◆ steptoe.com
Olson’s focus is general corporate advice, mergers and acquisitions, securities and corporate finance, and other commercial transactions.

Brian Spector ◆ Jennings Strouss
602-262-5977 ◆ jsslaw.com
Spector is a business lawyer and litigator whose practice focuses on debt resolution, bankruptcy litigation and collection matters.

Arizona Business Magazine has used its best efforts in assembling material for this list, but does not warrant that the information contained herein is a complete or exhaustive list of the top lawyers in Arizona, and hereby disclaims any liability to any person for any loss or damage caused by errors or omissions herein.

Arizona Business Magazine March/April 2012