by David Chapman
Staff Writer
The North Florida Chapter of the Association for Corporate Growth held its “Tough Deals and How to Solve Them” discussion Thursday featuring four panelists who talked about problems and solutions involved in corporate growth dealmaking.
Panelists included Gardner Davis, Foley & Lardner partner; Peter Reynolds, The Griggs Group partner; Howard Serkin, Heritage Capital Group chair; and Mike Sullivan, of Fletcher Stein. The sold-out event of 80 people featured 10-minute presentations by each panelist on particular topics with advice, followed by a brief question-and-answer session. Here’s a quick look at what each panelist said.
Davis
• When dealing with private equity firms, its best to staple an equity commitment letter to the letter of interest.
• When suspecting the other party doesn’t have the cash to close on a deal, write in clauses for protection.
• Many times, tax advice on a deal isn’t given until after the deal is signed. Negotiate ahead of time with the seller to restructure the deal if possible or ensure some form of protection in the case of a problem with the deal.
Reynolds
• Moving forward in deals, especially now, is difficult with so much uncertainty in tax rates. “We’re going to have to come up with creative ways to get things done.”
• The tax objectives of the seller and acquirer are different and almost diametrically opposed.
• Over the past 10 years, the IRS has looked more into issues regarding Section 338 acquisitions, which is when a business is acquired through the purchase of stock, which should continue.
Serkin
• “Think of everything that can go wrong after a closing and anticipate it.”
• While the buyer in a deal typically writes the contract, the seller should “make a big push to at least influence the contract early.”
• There are often many fees associated in deals, and both parties should ask for all of them in advance so that they don’t crop up later in negotiations, when it is much more difficult to negotiate them.
Sullivan
• Acquiring firms should look into what they’re inheriting in terms of environmental and physical property issues.
• Include those potential problems in the assessment.
356-2466