In order to properly serve an M&A acquirer (the “Acquirer”), as their lawyer, I need access to the various individuals who comprise and lead my client, and not just my day-to-day liaison there.
Form the Acquirer’s point of view, it is a good idea to have three or four appropriately situated individuals within the company sit down with me. That way, I already have a feel for their respective issues in the deal BEFORE doing due diligence of the Target. If time constraints preclude such meetings before I am on a plane to visit the Target (M&A deals can be very rushed), I try to catch up with these individuals as the deal progresses.
Ideally, these individuals in the Acquirer will be:
(1) the VP of business development (or CEO: whoever is driving the deal), who should elaborate on what is really going on here and what the client is really looking to buy. I may need to remind the Officer concerned of my ethical duty of confidentiality, because there are at times more or less hidden goals underlying the deal which the Officer does not yet want to share widely, even within the Acquirer. Yet if I do not know these hidden goals, I cannot help assure that they are accomplished in the deal as consummated;
(2) the head of the product group, operating division or subsidiary which will digest the Target, who will elaborate how she sees the acquisition, and where she has concerns. Do the acquired product lines complement or overlap each other? What are her priorities within the various product lines, technologies and employees being acquired? Will integrating the acquired business’s IT systems pose problems? Will the product lines be integrated or run as a separate subsidiary? Are there technological aspects of the target that warrant special attention? How do the Target’s customers complement each other? The list goes on.
(3) the Controller or Finance VP who will be handling the accounting due diligence, who will likely have already reviewed the Target’s financial statements and can advise on the potential hotspots in them. As he goes through the financial statements line by line with his opposite numbers on the Target’s side, I will need to be parallel processing on the legal side. The Target being (hopefully) in a business that both the VP Finance and I have some familiarity with will facilitate our joint effort to identify issues in advance; and
(4) depending on the nature of the Target, the Officer responsible for a domain particularly impacted by the acquisition. This is more difficult to identify in advance. If the acquisition involves significant patents, the Acquirer’s Officer responsible for IP is the person. The HR Officer often fits under this heading, as does the GM of any local sales office or other facility in a location near a key location of the Target.
As I discuss the deal with each of these individuals, issues will inevitably arise, and they will shape the focus of my legal due diligence going forward. If I don’t talk with these individuals, I could waste a lot of due diligence time on unnecessary matters of little consequence to the Acquirer, and spent insufficient time on what counts for the Acquirer.