Tag Archives: mergers and acquisitions

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Greenberg Traurig among ‘Best Corporate Law Firms’

The international law firm Greenberg Traurig, LLP, with more than 50 Arizona-based attorneys, has been named one of America’s Best Corporate Law Firms by Corporate Board Member, an NYSE Euronext company, and global business advisory firm FTI Consulting, Inc. in their annual survey of directors and general counsel of publicly-traded companies. The award was presented Tuesday as part of Corporate Board Member’s 6th Annual Legal Recognition Dinner in New York.

“We are very grateful for this honor,” said John Cummerford, a co-managing shareholder in Greenberg Traurig’s Phoenix office. “This is especially noteworthy since this recognition comes from our peers in the industry – general counsel of public companies – and reflects the respect our firm has earned worldwide.”

Each year, Corporate Board Member and FTI Consulting team up to conduct research to reveal those law firms that directors and general counsels believe to be the most respected legal counsel nationwide. This year, Greenberg Traurig is included on the 2013 Top 25 National Law Firm General Counsel’s Rankings list.

Greenberg Traurig attorneys represent both public and privately-held clients in a wide range of industries and in transactions including mergers and acquisitions, private equity transactions, public and private offerings of securities, as well as litigation, real estate, intellectual property, tax and other matters.

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Greenberg Traurig among 'Best Corporate Law Firms’

The international law firm Greenberg Traurig, LLP, with more than 50 Arizona-based attorneys, has been named one of America’s Best Corporate Law Firms by Corporate Board Member, an NYSE Euronext company, and global business advisory firm FTI Consulting, Inc. in their annual survey of directors and general counsel of publicly-traded companies. The award was presented Tuesday as part of Corporate Board Member’s 6th Annual Legal Recognition Dinner in New York.

“We are very grateful for this honor,” said John Cummerford, a co-managing shareholder in Greenberg Traurig’s Phoenix office. “This is especially noteworthy since this recognition comes from our peers in the industry – general counsel of public companies – and reflects the respect our firm has earned worldwide.”

Each year, Corporate Board Member and FTI Consulting team up to conduct research to reveal those law firms that directors and general counsels believe to be the most respected legal counsel nationwide. This year, Greenberg Traurig is included on the 2013 Top 25 National Law Firm General Counsel’s Rankings list.

Greenberg Traurig attorneys represent both public and privately-held clients in a wide range of industries and in transactions including mergers and acquisitions, private equity transactions, public and private offerings of securities, as well as litigation, real estate, intellectual property, tax and other matters.

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Greenberg Traurig’s M&A Practice honored

The international law firm Greenberg Traurig, with more than 50 Arizona-based attorneys, ranked among the top law firms representing investment banks and financial advisors in mergers and acquisition transactions in 2012, according to Corporate Control Alert.

Greenberg Traurig’s M&A Practice ranked 4th among all law firms representing investment banks and financial advisors in U.S. mergers and acquisitions, with 17 transactions in the 2012 Banker Representation listing, published by Corporate Control Alert, a journal of legal and financial deal-making trends. Firms were ranked by the total number of deals valued at $100 million or more from January 2012 to December 2012. Greenberg Traurig’s M&A Practice was credited with several high-profile banker representations, including Group Modelo, S.A.B. de C.V. in its pending $20.1 billion acquisition by Anheuser-Busch InBev and ConAgra Foods, Inc. in its $6.8 billion acquisition of Ralcorp Holdings, Inc.

“Ranking fourth among all U.S. law firms affirms Greenberg Traurig is a leading law firm in M&A transactions for investment banking and financial advisory firms,” said Quinn Williams, a Corporate/ M&A shareholder in Greenberg Traurig’s Phoenix office.

Greenberg Traurig’s Corporate and Securities/M&A Practice has more than 350 attorneys in more than 30 offices around the world providing counsel and services to companies and entrepreneurs throughout Americas, Europe and Asia. Greenberg Traurig’s practice groups and attorneys have been recognized as No. 1 in their respective geographic regions by The National Law Journal, Chambers & Partners, Corporate Board Member magazine, Latin Lawyer magazine and numerous regional and local professional publications and rankings.

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Greenberg Traurig’s M&A Practice honored

The international law firm Greenberg Traurig, with more than 50 Arizona-based attorneys, ranked among the top law firms representing investment banks and financial advisors in mergers and acquisition transactions in 2012, according to Corporate Control Alert.

Greenberg Traurig’s M&A Practice ranked 4th among all law firms representing investment banks and financial advisors in U.S. mergers and acquisitions, with 17 transactions in the 2012 Banker Representation listing, published by Corporate Control Alert, a journal of legal and financial deal-making trends. Firms were ranked by the total number of deals valued at $100 million or more from January 2012 to December 2012. Greenberg Traurig’s M&A Practice was credited with several high-profile banker representations, including Group Modelo, S.A.B. de C.V. in its pending $20.1 billion acquisition by Anheuser-Busch InBev and ConAgra Foods, Inc. in its $6.8 billion acquisition of Ralcorp Holdings, Inc.

“Ranking fourth among all U.S. law firms affirms Greenberg Traurig is a leading law firm in M&A transactions for investment banking and financial advisory firms,” said Quinn Williams, a Corporate/ M&A shareholder in Greenberg Traurig’s Phoenix office.

Greenberg Traurig’s Corporate and Securities/M&A Practice has more than 350 attorneys in more than 30 offices around the world providing counsel and services to companies and entrepreneurs throughout Americas, Europe and Asia. Greenberg Traurig’s practice groups and attorneys have been recognized as No. 1 in their respective geographic regions by The National Law Journal, Chambers & Partners, Corporate Board Member magazine, Latin Lawyer magazine and numerous regional and local professional publications and rankings.

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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

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Arizona’s Top Lawyers 2012 – Mergers & Acquisitions – Real Estate

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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MERGERS AND ACQUISITIONS

Charles R. Berry ◆ Polsinelli Shughart PC
602-650-2030 ◆ polsinelli.com
Berry has extensive experience in securities regulation, public offerings, business mergers, acquisitions and sales.

Brian H. Blaney ◆ Greenberg Traurig, LLP
602-445-8322 ◆ gtlaw.com
Blaney concentrates his practice on corporate and securities law, mergers and acquisitions, and private equity investments.

Joseph M. Crabb ◆ Squire, Sanders & Dempsey
602-528-4084 ◆ squiresanders.com
Crabb focuses his practice on corporate finance and securities matters including merger and acquisition transactions, public and private securities offerings, and counseling corporate officers and directors.

Matthew P. Feeney ◆ Snell & Wilmer L.L.P.
602-382-6239 ◆ swlaw.com
Feeney’s practice is concentrated in the areas of mergers and acquisitions, securities offerings, SEC reporting and compliance, and corporate governance matters.

William M. Hardin ◆ Osborn Maledon PA
602-640-9322 ◆ omlaw.com
Hardin’s practice includes representing public and private companies in mergers and acquisitions, venture capital and private equity financing, securities offerings and other significant business transactions.

Karen C. McConnell ◆ Ballard Spahr LLP
602-798-5403 ◆ ballardspahr.com
McConnell is a partner in the business and finance department and practice leader of the mergers and acquisitions/private equity group.

Bruce E. Macdonough ◆ Greenberg Traurig, LLP
602-445-8305 ◆ gtlaw.com
For more than 25 years, Macdonough’s practice has concentrated on mergers and acquisitions, public and private securities offerings, and providing general corporate counsel to public and private companies.

Thomas J. Morgan ◆ Lewis and Roca LLP
602-262-5712 ◆ lrlaw.com
Morgan practices in the areas of securities, with emphasis in public and private securities offerings, private equity fundings, mergers and acquisitions, regulatory compliance, commercial transactions and general tax planning.

Steven D. Pidgeon ◆ DLA Piper LLP
480-606-5124 ◆ dlapiper.com
Pidgeon concentrates his practice on securities offerings, mergers and acquisitions, recapitalizations, and private equity and venture capital investments.

Susan E. Wells ◆ Jaburg & Wilk P.C.
602-248-1034 ◆ jaburgwilk.com
Wells’ 30 years of practice include mergers and acquisitions and securities at large law firms in Phoenix and New York City.


REAL ESTATE

Edwin C. Bull ◆ Burch & Cracchiolo, P.A.
602-234-9913 ◆ bcattorneys.com
Martindale-Hubbell rated 5.0, Bull’s practice includes zoning, general plan amendments, specific area plan approvals and amendments, variances, development impact fees and real estate transactions.

J. Scott Burns ◆ Burns and Burns, P.C.
602-264-3227 ◆ b-blaw.com
Burns is a Board Certified Real Estate Law Specialist with a practice area emphasizing the acquisition and disposition of commercial and industrial properties, title review, landlord tenant issues and commercial lease negotiations.

Christopher A. Combs ◆ Combs Law Group
602-957-9810 ◆ combslawgroup.com
Combs writes a regular column for Arizona REALTOR Digest and is a former member of the Pittsburgh Pirates minor league baseball organization.

Mark Dioguardi ◆ Dioguardi Flynn LLP
480-970-2430 ◆ dioguardiflynn.com
Mark has 31 years of extensive practice in the fields of real estate law and private venture finance including in the areas of development, acquisitions and dispositions, joint ventures, finance, leasing, syndications, and zoning and entitlements.

Gerald L. Jaco ◆ Gust Rosenfeld PLC
602-257-7436 ◆ gustlaw.com
Jacobs has focused almost his entire 47-year legal career on real estate transactions and related areas.

Steven L. Lisker ◆ Squire, Sanders & Dempsey LLP
602-528-4023 ◆ squiresanders.com
Lisker is a certified specialist in real property law by the State Bar of Arizona, represents real estate developers and builders in the review, planning, acquisition, development, financing, sale, leasing and regulatory compliance of real estate projects.

J. Lawrence McCormley ◆ Tiffany & Bosco
602-255-6005 ◆ tblaw.com
McCormley has extensive transactional real estate, bankruptcy, and litigation experience.

Don J. Miner ◆ Fennemore Craig PC
602-916-5000 ◆ fclaw.com
Miner was the buyer’s counsel in sale of a portfolio of $101 million of loans secured by residential real estate mortgages.

James R. Nearhood ◆ Nearhood Law Offices PLC
480-269-8979 ◆ nearhoodlaw.com
For more than 20 years, Nearhood has been one of a small elite group of attorneys certified by the State Bar of Arizona as a Real Estate Specialist.

Michael E. Tiffany ◆ Tiffany & Bosco PA
602-255-6000 ◆ tblaw.com
Tiffany concentrates in the area of commercial transactions, primarily in real estate and finance.

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

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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

Tips To Help You Get The Best Price In A Down Economy - AZ Business Magazine Jul/Aug 2010

If You’re Selling Your Business, Here Are Some Tips To Help You Get The Best Price In A Down Economy

The past 18 months have been extremely difficult for participants in the mergers and acquisitions community. Purchase and sale transactions in 2009 were at their lowest levels since shortly after the dot-com bubble burst at the beginning of this decade. The main culprit? Most observers agree that the lack of debt financing to fund (or leverage) buy-out transactions stymied deal-making in 2009. Further, valuations (or more accurately, the multipliers that drive valuations) took a nosedive as well. Finally, a general lack of uncertainty caused both potential buyers and sellers to approach any proposed transaction with a great deal of trepidation.

The result, of course, was a down market as both buyers and sellers sat on the sidelines waiting for conditions to improve. Many of the deals that did occur were fire sales (often in connection with liquidation proceedings), rather than the culmination of a well-planned and profitable exit strategy.

Although the economy is showing signs of recovery in 2010, many industries remain depressed (real estate, construction, and manufacturing, to name a few) and unemployment remains high. Many economists and dealmakers are cautiously optimistic about the future, but down in the trenches things are still very tough. As a result, a business owner who might otherwise desire to develop an exit strategy for his or her business is likely working 24/7 just to keep the business afloat. From the “glass half full” perspective, however, the depressed economy presents the foresighted owner with an opportunity to get her house in order, so that when market conditions improve she will be in the best position possible to seal a deal quickly.

You should begin preparations to sell your business at least 12 months prior to the date on which you anticipate completing a sale. If you are lucky enough to receive indications of interest in your company, you will discover quickly that selling your business is a full-time job in and of itself. However, the time demands will be much more manageable if you have properly prepared your business for sale long before you receive the first inquiry from a potential buyer.

As the owner of your company, the first thing you should do is step back for a moment and consider how indispensable you are to the business. If you take a week’s vacation, does it take you a month to get the company back on track once you return? Likewise, are you the primary contact for your company’s most significant accounts? If the answer to either of these questions is “yes” (or even a strong “maybe”), then you are in a difficult position. Buyers, especially financial buyers, generally prefer acquisition targets without significant “key man” risks. Start now to wean the company from you by developing a plan to delegate authority to other individuals and automate company operations. If you don’t, you will likely find yourself saddled with a burdensome employment or consulting agreement after the sale is complete in order to mitigate the buyer’s perception that your departure would lead to the company’s imminent demise. On the other hand, if you want to continue to work for the company after the sale, your “key man” status is a sure-fire way to ensure your continued employment.

In a similar vein, does your bottom line reflect your company’s true profitability? Put another way, once your potential buyer begins its due diligence, will it be required to restate your financial statements in order to get a true picture of the company’s cash flow, balance sheet and net income? Many entrepreneurs find it difficult to separate their personal financial situation from their company’s. Although it may be tempting to run personal expenses through the company’s books in order to obtain expense deductions, this practice often clouds the true performance of the company and can limit your return on the back end once you are ready to sell. If you have not done so already, adopt tax strategies for your company that are transparent and, above all, legal and that won’t require your buyer to do back flips in order to get a true understanding of the business’ financial position and results of operations.

Think carefully about your existing arrangements with key employees. Are they properly incentivized to stay around once the company is sold? Would it help to lock some of them into long-term employment arrangements if they are key contributors to the value of the business? On the other hand, do any employees have change of control or “golden parachute” agreements that will burden the business, or that the buyer will insist be bought out at or prior to closing? It is often best to deal with these types of issues before the rumors of a sale start circulating among the employees.

Does your company own the real estate on which its facilities are located? If so, you may want to consider spinning off the real estate to a separate company owned by you (as opposed to being owned by the operating company). Buyers often do not want the real estate associated with an operating business unless the property has some strategic value. As such, much time and effort often is spent detaching the real estate from the operating business as part of the acquisition transaction. This process can be tedious and time consuming, as it requires new title insurance commitments, appraisals, or assignment or renegotiation of financing arrangements. Also, if your business is a corporation, there are very good tax reasons to transfer ownership to a non-corporate entity. Finally, the real estate component of the transaction can also be another source of income for the owners through the negotiation of a valuable long-term lease of the facility to the buyer.

As you begin to consider a sale, be sure your company is properly positioned from a tax standpoint. Sit down with your tax adviser and discuss the tax ramifications resulting from either an asset sale by the company or a sale of the equity by the owners. Generally (for tax and other reasons), buyers prefer asset sales and sellers prefer equity sales. Further, the legal treatment of a transaction often does not coincide with how the transaction is treated for tax purposes. For example, to meet both buyer and seller preferences, an equity sale for state law purposes can be treated as an asset sale for income tax purposes. While a full discussion of income tax treatment is beyond the scope of this article, it is imperative to involve your tax adviser as early in the sales process as possible, and it may be well worth the time and upfront costs to restructure your business now in a manner that best positions the business from a tax standpoint for a potential future sale.

Make sure there are no skeletons in your closet before you commence negotiations with your buyer. Do you have audited financial statements for your business? If not, consider engaging a certified public accountant to conduct an audit of your company as of your most recent fiscal year, or at the very least take steps to put the company’s financial affairs in order so that an audit can be conducted quickly later. Most buyers (or the lender providing the financing to the buyer for the acquisition) will require at least one full year of audited financial statements. An audit requires a thorough review and cross-check of the company’s books and records, and will likely result in certain additional management controls being put in place for your business. These controls may be outside the norm of the company’s historic business operations, but will likely result in increased efficiencies once implemented.

In addition to getting your financial records up to speed, you should also prepare for the legal due diligence review that the buyer (and its lender) will conduct of your business. Make sure your contractual relationships are all documented and well organized. Do you operate with “handshake” agreements? If so, take the time to enter into written, legally-binding agreements with your vendors and customers, even if these agreements are fairly simple. Also, make sure none of your important agreements is set to expire shortly before or after the time you expect the transaction to close. By renegotiating expiring contracts now you may be able to take the buyer out of the negotiation process later on. Documenting or renegotiating contracts will take the concerted effort of your management group, including all employees who have authority to enter into contracts, as well as the assistance of legal counsel. Remember that the only thing worse than an unwritten agreement is a written agreement that does not actually reflect the agreement or course of dealing between the parties.

Finally, if you have not already done so, consider preparing a procedures manual for your business and engaging an attorney to prepare an employee handbook and significant company policies. The existence of well-drafted manuals, handbooks and policies will give your business credibility and make the transition to new ownership less difficult. You should do this well in advance of closing to give your management team and employees adequate time to adjust to any new procedures or protocols that may need to be implemented.

Like the financial markets in general, potential business buyers crave certainty and stability in an acquisition target. Engaging in the preparation and organizational exercises described above will go a long way toward injecting stability in your company, which in turn will instill confidence in your buyer and enable you to negotiate the best price possible for your business.

Arizona Business Magazine Jul/Aug 2010

Ensemble DevMan

Ensemble DevMan Of Arizona Aims To Benefit Medical-Office Clients

Medical real estate developers Ensemble Real Estate Services and DevMan Company have joined forces to become Ensemble DevMan of Arizona. The union was official Nov. 1.

Ensemble DevMan specializes in medical office development, management, leasing and brokerage — a combination of each firm’s services before the merger. The new company has 110 employees and the combined portfolio includes 124 properties totaling more than 5.4 million square feet of space in four states. Since neither company’s location is big enough to house the new firm under one roof, the Ensemble building on 24th Street and Camelback has been dubbed the south office and the DevMan building a block away on East Missouri Avenue is the north office. Accounting, property management and development services are located in the south building and brokerage operations are in the north office.

Michael Moskowitz of Ensemble Real Estate Services says no money changed hands when the companies merged — they simply combined the two businesses. Ensemble was founded in 1989 by Moskowitz and partners Kambiz Babaoff and Randy McGrane. The company’s focus is developing, leasing and operating medical facilities on hospital campuses.Michael Moskowitz of Ensemble Real Estate Services

“This wasn’t a Wall Street-type merger,” says Moskowitz, Ensemble DevMan’s managing director. “Randy, Bill (Molloy) and I have known each other for a long time, so it was a decision that evolved from casual to serious over time. Earlier this year, we talked about doing a specific deal together and then we talked about it again over the summer and questioned whether we should put the businesses together. In the end, we all decided it made sense. Merging allows us to provide our clients with more talent and resources, a bigger knowledge base and more solutions.”

DevMan founder Bill Molloy described the merger as comfortable because both companies share the same culture and values. He also considers it a wonderful opportunity to enhance services for clients and explore new projects. Molloy started DevMan Company in 1981 to provide brokerage and management services to the medical real estate community and to develop physician-owned medical office buildings.

“As a result of the merger, we are now a stronger company with a bigger platform for projects,” Molloy says. “We also have a bigger resource team, so Randy, Michael and I can truly act as managing members and sponsor the business and identify new opportunities in Arizona and outside the states we currently work in.”

Sheila Gerry, senior vice president of John C. Lincoln Health Network, has done business with Ensemble and DevMan in the past and considers both outstanding organizations.

“Ensemble and DevMan have slightly different areas of strength, so this merger is going to bring a full array of diverse services to their clients,” she says. “It’s going to be great for physician-owners and tenants, as well as for our community.”

Tracy Altemus, a member of DevMan’s staff since 1987, admits that initially she was cautiously optimistic about the concept of a merger, but then quickly changed her mind.Bill Molloy

“There are always concerns with change, but I couldn’t have thought of a better fit for our two companies,” says Altemus, brokerage service manager for Ensemble DevMan. “I’ve known the principals of Ensemble for several years and always had a very high regard for them. I’ve also worked for years with their key brokerage employees, Sharon Cinadr, Marina Hammersmith and Murray Gares, and I always knew they were a class act. I also knew that their property-management philosophy was similar to ours: The tenant is ‘all important.’ In fact, when one of our clients moved from our building to theirs, I felt good knowing that they were in excellent hands and would be well taken care of.

“Ensemble and DevMan have similar cultures and are a natural fit,” she continues. “We all feel energized by the change and are looking forward to building a better mousetrap to provide excellent development, brokerage, asset and property management services to our clients, while having fun and feeling rewarded as part of a quality-centric organization.”

As a result of the merger, Ensemble DevMan has eight projects in the pipeline for development, totaling 369,000 square feet. The projected value of the projects is $170,537,000.

The projects include:

  • The Medical Plaza at THE CITY, a 104,400-square-foot medical office building in Surprise. Project cost is $26 million and it is scheduled to break ground this month.
  • Summit Medical Plaza, a 45,000-square-foot physician-owned medical office building on the campus of Summit Regional Medical Center in Show Low. The $11 million project is scheduled to break ground in either March or April.
  • A 42,000-square-foot medical office building on the campus of Auburn Regional Medical Center in Auburn, Wash.
  • Banner Gateway Medical Center, a 36,000-square-foot medical office building on the campus of Banner Ironwood Medical Center in Pinal County.
  • Canyon Crossings, a $9 million, 31,000-square-foot retail and professional plaza across from Banner Gateway Medical Center in Gilbert. Construction on this project kicks off in April and will be complete by the end of the year.
  • Phoenix Children’s Hospital’s West Valley Specialty & Urgent Care Center and an adjacent medical office building totaling 72,000 square feet in Avondale. The $19 million project will break ground sometime in February or March.

“The merger of Ensemble and DevMan will ultimately provide Phoenix Children’s Hospital with access to the expertise from both firms,” says Robert Meyer, president and CEO, Phoenix Children’s Hospital. “As a client, this merger will increase the number of important relationships needed in the medical real estate community and will give Phoenix Children’s Hospital a broader reach in the Greater Phoenix market. Having existing relationships with both companies, I see this merger as very positive.”

www.mayoclinic.org

Proxies

The SEC Catches Up On New Technology In Proxy Solicitations

A quick tutorial: Proxies are the means by which public shareholders vote. The Securities Exchange Act of 1934 governs the solicitation of those proxies. The act and the regulations adopted by the Securities and Exchange Commission under the act are designed to ensure a fair process with adequate disclosure to shareholders so they may make an informed voting decision in a timely manner.

In the past year, the SEC has adopted significant rules intended to simplify, clarify and modernize proxy solicitations by use of the Internet.

In July 2007, the SEC adopted amendments that modernize the proxy rules by requiring issuers and other soliciting persons to follow the “notice and access” model for proxy materials. Soliciting persons are now required to post a complete set of their proxy materials on an Internet site and furnish notice to shareholders of their electronic availability. The Internet site must be a site other than the EDGAR (Electronic Data Gathering, Analysis and Retrieval system) maintained by the SEC. The site must be publicly accessible, free of charge and maintain user confidentiality. In addition, the materials posted must be in a format convenient for printing and for reading online. Companies must provide paper or e-mail copies, as specified by the shareholder, within three business days of a shareholder’s request.

Notice to shareholders can be provided in one of two ways: the “notice-only” option, which is simply notice of electronic availability; or the “full-set delivery” option, which is a full set of paper proxy materials along with a notice of Internet availability. Under the “notice only” option, a notice must be sent at least 40 calendar days before the date that votes are counted. Under the “full-set delivery” option, notice need not be made separate and the 40-day period is not applicable, so the notice can be incorporated directly into the proxy materials.

Under both options, the notice must include certain specific information and must be filed with the SEC. The options are not mutually exclusive, so one option can be used to send notice to a particular class of shareholders, while the other option can be used to send notice to others. Intermediaries and other soliciting persons must also follow the “notice and access” model, with some exceptions. Specifically, intermediaries must tailor notice to beneficial owners, and soliciting persons other than the issuer need not solicit every shareholder. Most large public companies were required to follow the “notice and access” model for proxy materials as of Jan. 1, 2008. All others, including registered investment companies and soliciting persons other than an issuer, can voluntarily comply at any time, but must fully comply by Jan. 1, 2009.

Effective Feb. 25 of this year, the SEC adopted further amendments that encourage use of the Internet in the proxy solicitation process by facilitating the use of electronic shareholder forums. These amendments are intended to remove some of the legal ambiguity resulting from the use of electronic shareholder forums by clarifying that participation in an electronic shareholder forum is exempt from most of the proxy rules if specific conditions are met. The new rules also establish that shareholders, companies and other parties that establish, maintain or operate an electronic forum will not be liable under the federal securities laws for any statement or information provided by another person participating in the forum.

Specifically, any participant in an electronic shareholder forum is exempt from the proxy rules if the communication is made more than 60 days before the announced date of the company’s annual or special shareholder meeting, or if the meeting date was announced less than 60 days before it was scheduled to occur, within two days of the announcement, provided that the communicating party does not solicit proxy authority while relying on the exemption. Solicitations that fall outside these relevant dates continue to be subject to the proxy rules.

Further, if a solicitation was made within the relevant dates but remains electronically accessible thereafter, the solicitation could then become subject to the proxy rules. In this regard, the SEC suggests that forum operators give posting users a means of deleting their postings or having their postings “go dark” as of the applicable 60 day or two day cut off.

While the amendments exempt solicitations from the proxy rules, they do not exempt posting persons from liability for the content of their postings under traditional liability theories, including anti-fraud provisions that may require a participant to identify himself and which prohibit misstatements and omissions of material facts. Further, the amendments extend liability protection only to shareholders, companies and third parties who create, operate or maintain an electronic shareholder forum on behalf of a shareholder or company. These persons receive protection against liability for statements made or information provided by participants in the forum, so long as the forum complies with federal securities laws, relevant state law and the company’s charter and bylaws.

Karen C. McConnell is partner-in-charge of the mergers and acquisitions/private equity group; Adrienne W. Wilhoit is a partner; and Brooke T. Mickelson is an associate at Ballard Spahr Andrews & Ingersoll, www.ballardspahr.com.