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

    [email protected]

    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