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7/27/2019 Expert Advice - Goodarz Agahi
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2013 Smart Business Network Inc. Reprinted from the October 2013 issue of Smart BusinessOrange County.
Expert advicePreparing for an acquisition: how toassemble the right deal team
It is a little known act that theres a strong
connection between the success o a deal
and the team assembled to get it done.
Management needs to be very diligent
about selecting members o its internal and
external deal team; its critical that the teams
have the right ft, experience and industry
expertise, says Goody Agahi, a shareholder
at Stradling Yocca Carlson & Rauth.
Smart Businessspoke with Agahi about
what it takes to assemble a strong mergers
and acquisitions (M&A) deal team.
What is a deal team and how is it composed?
A deal team generally consists o key
employees at the company, M&A attorneys,
accountants and, in certain circumstances,
other outside advisers such as investment
bankers. The frst step in assembling a deal
team is to identiy the key employees at
the company who are intimately amiliar
with the companys operations and fnancial
matters. The next step is or the company
to identiy, interview and ultimately select
its M&A attorney and other outside advisers.
In selecting an M&A attorney, the
company should be ocused on an attorneys
M&A experience, industry expertise,
reputation and ft. An experienced M&A
attorney will be able to assist the company
with identiying other service providers. For
example, i the company is considering an
auction process to eect a liquidity event,
an M&A attorney can reer the company to
multiple investment bankers that, based on
the attorneys experience, he or she believes
has the right experience and will be a good
ft or the company. Investment bankers can
assist the company by perorming an analysis
o the M&A landscape and identiying
prospective buyers. The auction processprovides the company an opportunity to
see how the market values the company
and, depending on the level o interest
by prospective buyers, gives the company
leverage in negotiating defnitive transaction
documents. An auction process, however,
may not always be appropriate.
What qualifcations are important to have in
each team member?
Extensive deal experience is critical when
considering whether or not to hire a
particular service provider. An experienced
M&A attorney will be able to advise the
company on substantive issues, potential
exposure and acceptable compromises.
An experienced investment banker can
help prospective buyers appreciate the
investment opportunity, and an experienced
accountant or CFO can give a prospective
buyer comort with respect to the
companys accounting methods, policies and
procedures, as well as quality o earnings.
Unortunately, too oten we see companies
using legal counsel that is ill-equipped
to handle an M&A transaction. This is
normally the case when management doesnt
ully appreciate the value the right M&A
lawyer can bring and, conversely, how costly
it can be to use a lawyer with little or no
M&A experience.
When should a company begin assembling
the deal team?
Once management begins considering
strategic alternatives, the company should
start the process o assembling a deal team.
Even i a sale transaction is years away, it is
prudent or a company to engage advisers to
position the company or a liquidity event.
For example, a companys M&A lawyer
can perorm a review o the companys
organizational documents, equity incentive
plans, compensation arrangements and
third-party contracts in order to identiy and
address any potential issues. By addressing
such issues in advance o a liquidity
event, the company can potentially avoid
unnecessary delays, valuation adjustments
and special indemnities in connection with
negotiating a liquidity event. The better
organized a company is, the more desirable
the company will be to prospective buyers.
Why is a strong deal team important to an
acquisition?
An experienced deal team will work
closely with one another to showcase the
investment opportunity, and identiy and
address potential diligence issues in advance
o a transaction. Seasoned proessionals have
been through the process; they understand
the issues and oer solutions that can
bridge gaps between the companys and a
prospective buyers positions. As a result, the
right deal team can maximize the purchaseprice, minimize the back-end exposure and
acilitate a quick closing.
GOODARZ GOODY AGAHI
Shareholder
Stradling Yocca Carlson & Rauth
(949) 725-4088
Insights Legal Aairs is brought to you by Stradling Yocca Carlson & Rauth
WEBSITE: Find Goodarz Goody Agahis profle at
www.sycr.com/Goodarz-Goody-Agahi.
INTERVIEWED BY ADAM BURROUGHS
INSIGHTS LEGAL AFFAIRS