EXECUTING THE DEAL

COMPLIANCE REQUIREMENTS

PRESENTED BY:

LORI ANN FOX, ESQ.

Agenda

• Why focus on deal compliance requirements?

• Deal transaction vehicles

• Deal transaction issues

Why focus on deal compliance requirements?

• $4.5T in deals in 2015

• 13,831 M&A U.S. deals in 2015

• Over 44,000 M&A deals worldwide in 2015

• 25,809 M&A deals as of August 3, 2016 deals

*Statistics above from https://imaa-institute.org/statistics-mergers-acquisitions/

3

DEAL TRANSACTION VEHICLES

Deal Transaction Vehicle - Types

• Acquisition or divestiture

• Merger

– General Merger

– Triangular Merger

• Forward

• Reverse

• Conversion

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Acquisition & Divestiture

• Acquisition

– Definition

• The act of becoming the owner of certain property

• Taking with or without consent, especially a material possession obtained by any

means

– Two types

• Share

• Asset

• Divestiture

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General Merger

A B

10

Forward Triangular Merger

T S

A A

S T 11

Reverse Triangular Merger

A

T S

A A

S T 12

Conversion

A A

DEAL TRANSACTION ISSUES

Issue – Know the Entities

• Are there subsidiary or related entities?

• In which industries?

• How to identify related entities?

• When to identify related entities?

• Where are entities?

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Issue – Good Standing

• Are the constituent entities in good standing?

– Domestic states

– Foreign states

– Foreign countries

• Are the subsidiary/related entities in good standing?

– Domestic states

– Foreign states

– Foreign countries

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Issue – Special Purpose Entity

• Triangular merger being used?

• When to form SPE?

• Does SPE need to be qualified in foreign states?

• Independent Director needed?

17

Issue – UCC

• Identify UCC’s

• Determine if action is needed

– Transfer filings?

– Amendment filings?

– Assignment filings?

• Audit for duration

• Calendar for compliance, renewals, continuation, termination, etc.

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Issue – Business Licensing

• Constituent in regulated industry?

• Subsidiary/related entities in regulated industry?

• Which regulated industry(ies)?

• Governing agencies

– Federal

– State

– County

– City

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Issue – Intellectual Property

• Identify IP assets

– Patents

– Trademarks

• Transfer

– How

– When

– Costs

20

Issue – Anti-Money Laundering

• Where are constituent/subsidiary/related entities located?

– US

– Foreign countries

• SDN checks/political persons

• LEI checks (financial institutions only)

• Ethics issues

– MRPC 1.2(d)

– MRPC 1.6

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Model Rules of Professional Conduct NO ASSISTANCE IN ILLEGAL OR FRAUDULENT ACTIVITIES

Rule 1.2(d)

• (d) A lawyer shall not counsel a client to engage, or assist a client, in conduct

that the lawyer knows is criminal or fraudulent, but a lawyer may

discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

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Model Rule 1.6 - Confidentiality

Client-Lawyer Relationship Rule 1.6 Confidentiality Of Information

• (a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).

• (b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:

– (1) to prevent reasonably certain death or substantial bodily harm;

– (2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services;

– (3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;

– (4) to secure legal advice about the lawyer's compliance with these Rules;

– (5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client; or

– (6) to comply with other law or a court order.

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Issue – Timing

• Underlying question for all transactions

– Delayed effective date

– Transfers timing

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Conclusion

• Why focus on deal compliance requirements?

• Deal transaction vehicles

• Deal transaction issues

THANK YOU FOR ATTENDING

PRESENTED BY:

LORI ANN FOX, ESQ.

EXECUTING THE DEAL -

COMPLIANCE REQUIREMENTS