Exemplar Customer Case Study:
Mergers & Acquisitions
Historically, mergers and acquisitions have been the most commonly used methods of corporate growth – and today’s extraordinary business environment has presented exceptional M&A opportunities. Strategic M&A present a company with a potentially larger market share, more diversified market opportunities, increased revenues, and enhanced shareholder value.
A well-planned and executed strategic merger can be a boon for a company as it achieves all growth and value objectives. Miss a nuanced point, however, and a merger can actually damage shareholder value and set a company’s strategy and market share back many years. Indeed, studies prove that more than half of acquisitions actually destroy shareholder value due to poorly planned and executed of pre- and post-merger details.
Understanding the complexities and avoiding pitfalls are the keys to success or failure. It is therefore critical to identify key strategic and tactical pre- and post-planning steps that assist CEOs and company boards to achieve M&A success.
The professional team at Exemplar understands that a merger is very often THE most important transaction a business can make. The power we bring is our knowledge, experience and teamwork. Our expertise in law AND business help our customers navigate the rocks as they contemplate expansion through acquisition. We act as trusted advisors on the full range of - pre- AND post-transaction issues so vital to M&A success.
A successful, high-profile mid-market software company in the medical records and credentialing space was in the initial stages of planning and executing an aggressive acquisition strategy. Due to strong board guidance and prudent management, the company was in a favorable position to leverage their reputation, market position and financial strength to expand vertically and horizontally through acquisition.
After initial fact-finding conversations, it was discovered that the company’s strong cash position and high profile moves in the market were quickly becoming counterproductive. To begin, their initial strategy was working to inflate target asset values.
In addition, it was clear that future acquisitions would necessarily have to be more frequent and increasingly complex, and the current outside legal counsel, who had arranged the first two transactions, was deemed by the board to be “in over their heads” and not suited for the aggressive and complex plans ahead.
Finally, though the first two acquisitions were relatively simple and straightforward – and integration of leadership and talent went fairly smoothly - it was clear that more attention had to be paid to human capital and cultural issues as the pace of acquisitions accelerated.
How We Helped
We provided the customer with careful review and analysis of their short- and long term goals, and then designed and implemented project management and disciplined methodology to prioritize and benchmark legal and business execution needs. Once needs were prioritized, we were able to work with the customer to employ holistic, closely integrated strategic and tactical legal and business processes and programs to support their goals,
These integrated business and legal processes and programs were implemented in a thoughtful, measurable way to ensure consistent, comprehensive high quality solutions for the company.
Solution – From Target Selection to Post-Merger Integration
Exemplar’s Investment Bank team was engaging as third-party “secret shopper” on behalf of the customer. The benefits for the customer were numerous. Primary among them was acting to hold down market valuations of potential targets and ultimately bring maximum value to the company and shareholders.
Specifically, the Investment Bank team was charged to work with the company leadership and board to:
• Analyze short and long term market direction
• Distinguish vertical and horizontal market segments
• Identify and refine criteria for potential acquisition targets
• Create and prioritize a short list of target companies
• Approach potential targets to gage and/or create interest
• Assess target
• Conduct thorough due diligence of company health and financials
• Negotiate favorable terms
• Effective and Efficient: Due Diligence and Deal structure
• Locked in the target with a solid Letter of Intent
• Engaged in effective and efficient due diligence including:
o Validation of Intellectual Property
o Identify risks and opportunities relative to Intellectual Property
o Confirm company’s represented Assets
o Identify and liens or encumbrances on company’s assets
o Review corporate debt structure and restrictive covenants that may cause a triggering event in the event of M&A.
o Review prior compliance with relevant regulations to determine liability risk from prior activities.
o Analyze stability of customer relationships and durability of contractual relationships in the event of change in control
• Worked with executives in our customer organization to strategize deal structure possibilities, review stage 1 Due Diligence to define drill-down items for further review
• Identified key human assets and negotiated executive employment agreements
• Drafted and negotiated Purchase Agreement defining the terms of sale
• Coordinate closing and escrow and execute the transaction
Exemplar Human Capital
• Performed careful analysis and executed full integration of all HR functions
• Attracted, assessed, retained, oriented and incented new team members to support and enhance the sales and marketing function of integrated company
• Created individual performance development, talent management, succession planning and management development programs to incentivize, develop and retain top employees
• Implemented an integrated psychometric assessment and competency model for leadership professionals to provide direction for growth
• Synchronized and consolidated benefits plans including pension, 401(k) and health and welfare
For information of how we can assist your organization, please contact an Exemplar team member today!