October 2022- Managing M&A Transactions in Midsize Companies

Completing a successful strategic acquisition is no small achievement for any small to midsize company, and their general counsel plays an integral role in the process. Being able to serve as the CEO’s right-hand strategic legal advisor on an acquisition can be a career game changer. But a significant transaction includes many moving parts, and overseeing the process requires some skill.

A key factor to success is understanding when and how to leverage in-house legal resources and which services to engage from the ecosystem of external legal service providers. This is instrumental to the GC in getting the deal across the finish line while protecting the CEO’s reputation and the acquirer’s return on investment, and it begins with due diligence and establishing a budget.

Conducting due diligence itself can be a daunting task, particularly because in-house legal teams of small to midsize companies rarely have personnel on staff with M&A expertise. In addition, those teams are already supporting multiple business areas and typically don’t have the resources to fully cover all the phases of an acquisition. Realizing where to leverage external support can make all the difference in successfully managing the transaction.

Outside counsel are important partners in advising on deal structures, negotiating SPAs, APAs, JV agreements, etc., and bringing in specialists in the areas of taxes, employment, executive compensation, benefits programs, litigation, real estate and compliance investigations. But their billable model can make it hard for small companies to use their services for a comprehensive due diligence review.

Legal technology vendors can also be a tremendous help. Applying their AI technology can reduce hours spent manually reviewing applicable clauses in the target company’s commercial and operational contracts. While the software tools used for these abstractions do drive efficiencies, teams of lawyers need to help manage these platforms and undertake certain administrative and operational tasks. Lawyers are also needed to utilize these abstractions of contractual terms to produce due diligence red flag memos and help pinpoint critical risks and liabilities.

ALSPs like QuisLex are another source of help in augmenting internal knowledge and expertise with specialized support for M&A transactions. They can operate at the intersection of the law firm and legal technology vendor in performing due diligence reviews and assisting with post-closing planning and integration workstreams involving contract review and end-to-end support with change of control notices and contract termination and assignment letters, among other things.

While law firms, technology vendors and ALSPs can work together seamlessly and add value, leveraging each of their strengths to avoid unexpected contract liabilities or other surprises, the glue that holds everyone together is the in-house legal team, and especially its GC.

Shanil Vitarana serves as executive director, QuisLex Global M&A and Corporate Solutions. He recently wrote about this in greater detail in an article published by the ABA’s Business Law Today. For more of his insight on the topic, read the full article: “The Game-Changing Strategic M&A Transaction: How a Small to Midsize Company’s General Counsel Can Drive Success.”