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Project Management in M & A Transactions
IBA Annual Conference 2016
Hermann J. Knott, Luther, Cologne
Myra Garrett, William Fry, Dublin
Lise Lotte Hjerrild, Horten Law Firm, Copenhagen
Cyril Shroff, Cyril Amarchand Mangaldas, Mumbai
Kate Simpson, Bennett Jones, Toronto
Gabriella Covino, Gianni, Origoni, Grippo, Cappelli & Partners, Rome
Washington, September 19, 2016
Agenda
Introduction
Reasons to Embrace Project Management
Scoping as a Process of Direct Exchange with the Client
Due Diligence
Teaming/Planning
The Role of the Client in Project Management; Knowledge Sharing
Contract Drafting Phase
Negotiation Phase
Deal Completion Phase
Project Management – What is the future?
2
Introduction
Lawyers already intuitively practise project management – just not
formally
Often, that is exactly what is needed
BUT : Lawyers need to understand the principles of project
management so that they can correctly identify the Level of Ceremony
required for each deal
3
Level of Ceremony
4
the need
for LPM
deal size & complexity
= a light touch
= increased focus
Introduction
Project management can be described as:
A way of rendering legal services more efficiently and the method of
making the deal run as frictionless as possible.
Resistance to project management amongst lawyers?
Huge cultural difference in the attitude and willingness to adopt LPM
from country to country
Age is often a significant factor in the willingness to adopt LPM
Acquisition and implementation costs related to PM tools might be an
obstacle for smaller law firms
5
Lawyer’s attitude towards new technology
6
Why?
1. Improve predictability of timelines & cost
“How long & for how much?”
Successful businesses can’t operate with vagueness about timelines
and cost
2. Achieve the right objectives
“Client-defined success”
An essential element of our deals: delivering success as defined by the
client
3. Achieving success in the most efficient way possible
“Staying on track”
Costing the least & taking the least amount of time
7
Tools
Project management tools can be relevant to practically all phases of the
deal process, and can be used in varied areas such as:
Due diligence process
Document and knowledge sharing
Budget optimization
Communication, both internal and external
Effective collaboration between multiple firms/clients/other parties
Team management and structuring
Resource allocation
Process optimization
8
Reasons to embrace Project Management
Defined processes (life is easier)
Effective communication - Greater transparency, early visibility
and continuous improvement leading to added client satisfaction and
building stronger relationships
Foundational principles - Direct, Monitor and Control (This allows
one to be always on top of the transaction)
Always Prepared - Using a common and uniform project
methodology across the firm enables any lawyer to jump inside the
transaction in cases of contingency. This allows the entire firm to act
as the counsel instead of one individual lawyer.
Lessons learnt - Captured in a structured manner which allows you
to effectively leverage experience for future transactions
Simplifying the process - PM allows you to join the dots by
simplifying the large and complex
9
Reasons to embrace Project Management
Stronger governance over the entire M&A transactions - allows you to
become much more than a M&A counsel when you are controlling the
transaction. You are in a position to always deliver more to your clients.
Risk minimized
Early identification and management of risks
Better basis for fee calculation through defined processes
Have lawyers lost terrain in the depth of services they are able to
provide to clients? Is Project Management a tool to regain lost terrain?
10
The importance of background information on the relevant transaction to be
provided by the client:
1. business goals;
2. timing;
3. structure of the transaction proposed by the client.
Lawyers to amend and suggest where necessary.
Potential issues that arise at an early stage which might change the scope of work
and are relevant for the engagement letter and fee estimate;
An ideal PM tool could be a common electronic paperwork structured as a chart.
This would allow all the involved parties (advisors but also the client) to identify the
main elements of the transaction (parties, target company(ies), kind of transaction
(asset deal, share deal, merger, LBO, etc.) as well as those documents to be drafted
and negotiated during the phase preceding the due diligence investigation and the
negotiation phase (NDA, LOI, due diligence checklist). The mentioned chart include
a “comments/notes” section in order to optimize the exchange of information and to
speed up the scoping phase.
11
The Role of Scoping
12
Deal Scope
WHAT’S IN
shared agreement up-front on:
- Depth & breadth of due diligence
- Level of negotiation
- Risk appetite & tolerance
- What success looks like
WHAT’S OUT
shared agreement up-front on the:
- Assumptions
- Exclusions
- Scope Change
Control Procedures
13
Deal Scope: Tools
14
Deal Scope
Scope creep (n.): To add new provisions,
tasks or expected deliverables that are
outside an existing scope of work
Scoping Model - Project Washington Share Purchase - Sale
F/E Partner
Hourly
Rate Associate
Hourly
Rate JR Associate
Hourly
Rate
Trainee/
Paralegal
Hourly
Rate Total Blended Rate
380.00 280.00 200.00 100.00 245.30
Task Hours € Hours € Hours € Hours € Hours €
LOI15 5,700 10 2,800 - - - 25 8,500
SPA100 38,000 50 14,000 20 4,000 30 3,000 200 59,000
Tax Warranties/Indemnities6 2,280 10 2,800 - - 16 5,080
Due Diligence Assistance2 760 15 4,200 30 6,000 20 2,000 67 12,960
Disclosure Letter5 1,900 20 5,600 35 7,000 15 1,500 75 16,000
IP/IT/Data Protection4 1,520 30 8,400 - - 34 9,920
Employment/Share Options10 3,800 20 5,600 - - 30 9,400
Real Estate1 380 7 1,960 - - 8 2,340
Anti-Trust1 380 2 560 - - 3 940
Shareholder/Board 8 3,040 8 2,240 10 2,000 15 1,500 41 8,780
Closing Documents6 2,280 15 4,200 15 3,000 50 5,000 86 14,480
Settlement & post closing2 760 8 2,240 18 3,600 25 2,500 53 9,100
Total 160 60,800 195 54,600 128 25,600 155 15,500 638 156,500
15
Teaming
Team • Corporate
• Tax
• Anti-Trust
• IP/IT
• Employment
• Real Estate
Client
Communicate tasks + budget to each working group
Team
Leader
Teaming
16
Visualization of Who’s Doing What?
17
Confirmation of the scope of work. Discuss and negotiate the relevant engagement
letter is very useful; furthermore, it is necessary to negotiate and draft a NDA as well
as to discuss and agree upon the access to the relevant data room.
Type of work requested. Focus on the client’s requests: what does the client expect
as final output of the due diligence investigation (eg. red flag report, full due
diligence report, etc.).
Deal counsel compact. This tool is aimed at providing all the counsels involved into
the transaction with certain guidelines for their respective work and related output.
Confusion will be avoided as well as frictions.
Early due diligence assessment. Making an early due diligence assessment would
lead to prioritize the due diligence effort initially focusing on matters of client concern
with the objective of better managing time and expenses of the due diligence
process. If the results of the early due diligence effort are satisfactory, the client and
law firm can proceed to a more comprehensive due diligence review (thus breaking
down the due diligence into steps).
18
Due Diligence
19
Due Diligence : Tools (1st Level Review)
Success of TSG models – regular monitoring, storing experience in a
structured way, clear RACI matrix (Responsible, Accountable, Consult
and Informed)
Firms creating Shared Services entities to deliver operative/repetitive
services to further improve fee earner productivity
Within due diligence, creating smart models such as excel files to
capture historical data and learnings to assist in scoping and pricing.
Due diligence in the market such as Kira while are very smart tools but
sometimes prove difficult to use in a localised context.
20
Due Diligence
Skype for Business – Sharing your screen
21
Skype for Business – Sharing your screen
22
Skype for Business – Give control
23
Skype for Business – Take back control
24
25
Client & LPM : Tools
HighQ Collaborate labelled Horten Connect
26
Horten Connect - Users
27
Horten Connect - Permissions
28
HighQ Collaborate/Horten Contract
29
30
Client & LPM : Tools
31
Knowledge Management
32
Knowledge Management
1. Assume good wheels already exist…
2. Find Them
3. Tweak Them
33
Knowledge Sharing : Precedents
Deal issues drafting guide. Such a tool indicates a list of issues to be addressed by the
client and law firm at an early stage, in order to set negotiating positions. It is understood
that the mentioned tool should be used as internal instrument for the exchange of
information between clients and law firms, and should not be shared with counterparties.
Roles and responsibilities chart. This tool could be a common document to be shared
between all the parties involved into a transaction in order to assign and track specific
roles and responsibilities of individual members of the transaction team.
34
Contract Drafting
35
Contract Drafting : Tools
36
Contract Drafting Tools : Document
Assembly
Position paper showing an issues list and a summary of the different
positions of client and counterparties with relevant explanation
Discussion on the above chart in face to face meetings/calls
(Hopefully) Agreement on the position paper to be reflected in the
wording of the relevant transaction documents
Role of lawyers fundamental in order to reduce the gap between
different positions of client and counterparties and focus on major
issues
37
Negotiation Phase
38
Negotiation Phase : Tools
39
Deal Completion Phase
Document/Action Item Responsibility Status Final Signatures Fee Earner
Responsible
Share Purchase Agreement
Buyer’s/Sellers’ Solicitors Sellers’ Solicitors to comment on Buyer’s
draft
Buyer
Sellers
MG/BCO
Disclosure Letter Buyer’s/Sellers’ Solicitors Buyer’s Solicitors to comment on Sellers’
draft
Buyer
Sellers
MAT
Share transfer forms and Share
Certificates (or indemnity for lost
certificates)
Sellers Final Sellers
ATR
Valid Irish Tax reference numbers
Sellers Final N/A ATR
Group's corporate seals and records Target Co. Target Co.to provide at Completion
N/A ATR
Written resignations and waivers of
the directors and the secretary of the
Target Co.
Buyer’s/Sellers’ Solicitors Sellers’ Solicitors to provide comments
Directors/Secretary
(Target Co.)
ATR
Credit cards in the possession of any
director, secretary or other officer or
employee of the Target Co. resigning
at the Completion Date
Target Co. N/A N/A ATR
Appropriate forms to amend the
mandates given by the Target Co.to
its bankers
Target Co./
Bank
N/A N/A MRM
Board resolutions of the Target Co. Buyer’s/Sellers’ Solicitors Final Target Co.
MRM
Payment of Completion Payment Buyer At Completion N/A
40
Closing : Tools
41
After-Action Review : Tools
Will law firms become too technologized?
How can we still make visible to the client the true value of our services
All to comment
42
Project Management in M&A – what is the
future?
Discussion/Questions/Comments
THANK YOU
43
Your contacts
Dr. Hermann J. Knott, LL.M.
(University of Pennsylvania)
Partner
Member of the German and
New York Bar
Luther
Anna-Schneider-Steig 22
50678 Cologne, Germany
Phone +49 152 016 25783
Lise Lotte Hjerrild
Partner
Horten Law Firm
Philip Heymans Allé 7
2900 Hellerup, Copenhagen
Denmark
Phone +45 333 44147
Cyril Shroff
Managing Partner
Cyril Amarchand
Mangaldas
Peninsula Chambers
Peninsula Corporate
Park
Mumbai 400013
India
Phone +91 22 2496 4455
Kate Simpson
National Director of
Knowledge Management
Bennett Jones LLP
3400 One First Canadian
Place
Toronto, Ontario
Canada
Phone +416 777 7447
Myra Garrett
Partner
William Fry
2 Grand Canal Square
Dublin 2
Ireland
Phone +353 1 639 5122
44
Gabriella Covino
Partner
Gianni, Origoni, Grippo,
Cappelli & Partners
Via delle Quattro
Fontane 20, Rome
Italy
Phone +39 06 478751
