“The answer is the decisive factor that determines whether a company meets with success or failure when it acquires another company”, says Anne Kjølseth Ekerholt, Partner in SANDS.
“The next is of course whether you want a lawyer that just fills in the paperwork for you, or one that functions as a long-term advisor knows what it’s like in the jungle that is the world of business”.
A GOOD M&A LAWYER is worth his or her weight in shares.
Company mergers are often delicate and tricky affairs, with slow and intricate dialogue and negotiations involving very different objectives, sudden outbreaks of emotion, contract signings and expectations. Acquisitions designed to secure a market position or cut costs seldom surprise the market as investors have long since made the necessary adjustments to deal with the anticipated upswing. This is why, according to recent research, many people have unrealistic expectations about mergers – and also pay too much for acquired companies.
On the other hand, when a company is acquired for the purposes of finding a new direction and business model – which often pleases and excites the market – it is far more difficult to identify suitable candidates for acquisition and to estimate their real worth.
The “wrong” companies are purchased on an almost daily basis – and for all the wrong reasons, incorrect worth estimates are obtained to stipulate a price, and the wrong elements are integrated in the wrong business models.
“It really doesn’t have be so mixed up”, says Anne Kjølseth Ekerholt.
"We in SANDS have ingoing knowledge and expertise of the various branches, we have the legal experience and a first class working model that makes it far easier for you to see how a potential merger can be effectuated.
ADVICE FIRST – GIVES THE BEST POSSIBLE RESULT. Ekerholt started working with SANDS quite recently after 18 years as an M&A lawyer with Selmer. With us she leads a highly specialised team with a dozen partners who work exclusively with mergers, together with several specialists in specific branches and relevant fields of law such as compliance, financial advice, anti-corruption, due diligence and transactions. This is a highly professional partner-led environment that always thinks innovatively about how our lawyers should work hands-on with mergers.
"The result of a successful merger is never apparent until after the fact. We want to be the long-term and confidential advisor that through a thorough process can help you to assess whether the time is right to buy or sell a company, or whether you should perhaps hold off until the branch is more consolidated.
An M&A lawyer is no longer just an M&A lawyer. The demands associated with the title have increased considerably over the course of the last couple of decades. One example of this is that agreement formats have seen major change as a result of that one simply doesn’t know in many structured processes who the actual buyer will be”.
"The M&A process has in its entirety become considerably more streamlined than previously. It could well be that the new owner is a major multi-national company, and an international standard is therefore utilised, which increases the degree of complexity”.
A decade ago vendor due diligence (VDD) was not common – the independent analysis of the acquiring company’s financial, commercial, operational and tax characteristics.
"With the usual form of due diligence many competitors grasp the opportunity to take a look. With VDD we have greater control of what is shared – particularly at an early stage before one has dispensed of the less serious interested parties”, says Ekerholt.
It has also become more usual to provide the banks with a separate report, a so-called reliance report, where as previously they simply referred to the standard credit assessment. The content of share purchase agreements has also become more complicated and extensive. One often operates for example with a ‘lock box’ fixed price for the shares rather than agreeing on a settlement after the fact – with a separate set of accounts and guarantees for these.
"The requirements are constantly changing, so having lawyers that keep fully updated is vital.”
THE ART OF THINKING COMMERCIALLY. – One of the many things that differentiate SANDS from a number of other companies is that we understand the client’s commercial realities, why a merger is being considered. We do not accept commissions as technical implementers. We assess the risks, rewards and vulnerabilities. We ask the right questions early on to establish exactly what we wish to achieve. In order for pricing to be correct, one must be fully familiar with the status quo of the branch – including other aspects of the agreement complex”, the lawyer says.
This is why SANDS ensures that the M&A lawyers we employ have broad commercial experience and have themselves experienced what can be construed from a set of accounts and what influences the purchase price, EBITDA, equity and allocations.
"We are branch leaders because we want our people to carry the “commercial gene” as well as legal expertise. A great deal of economic knowhow is necessary to work in the way we do. You simply can’t be reserved and take a back seat; that just doesn’t work”, says Ekerholt.
"At the same time you need to have a good portion of musicality in relation to your surroundings in order to be able to match and weld together the various needs and demands that arise when different people and cultures are engaged in negotiations”.
FLEXIBILITY IN ACTION. SANDS’ strong regional presence with offices nationwide gives the company a special advantage in industries such as fisheries & aquaculture, energy, shipping, life science and technology companies. The M&A group’s extensive experience is utilised to keep the teams appointed to individual commissions as slim as possible, with a high level of partner participation.
"The first person you speak to as a client is the partner you will meet with throughout the process, not just a hoard of lawyers and assistants that are engaged underway.
In the summer of 2017 the group had 48 hours to complete due diligence on three companies.
This was a commission that had been ongoing through the summer months. We identified a new investor, and that was the time we had. We started with two lawyers and two partners and carried out a VD. Once this was completed we had two hectic weeks with one lawyer and one partner engaged on the task”, says Ekerholt.
"Not only was this a better alternative for the client, despite the fact that we were dealing with a major case, it simplified the work with the fewest possible people involved”.
SANDS has experienced rapid growth in becoming a leading Norwegian law company. Our partners have joined us from many leading law firms to help build something with SANDS that is experienced as new and fresh:
"We do not and never will chase the last kroner to the detriment of the quality of our work –or indeed our quality of life. This is common denominator for each and every colleague in SANDS. Our objective is to create something new, not to squeeze the last drop of juice from the apple”, says Ekerholt.
"Through our professionalism and a good portion of good, old fashioned enthusiasm for our work we shall continue to rank amongst the largest and most preferred M&A companies for what’s happening via the stock exchange – and outside it”.