Attention:
Card image cap

Earnouts in the Era of COVID-19: Best Practices for Designing Earnouts to Avoid Disputes


Level: Advanced
Runtime: 62 minutes
Recorded Date: November 12, 2020
Click here to share this program
Printer-Friendly Version
Closed Caption

$75

Add to Cart

Agenda

  • Earnouts = Litigation Magnet?
  • Revenues vs Earnings (EBITDA)
  • Standard Earnout Covenants
  • Specific Operating Covenants - Seller Friendly
  • Best Practices for Dispute Resolution Provisions
  • Q & A
Runtime: 1 hour, 2 minutes
Recorded: November 12, 2020
For NY - Difficulty Level: Experienced attorneys only (non-transitional)

Description

In this uncertain environment after COVID-19, earnouts are likely to be used more frequently to bridge valuation gaps between buyers and sellers, and to make up a larger percentage of the purchase price. Earnouts, however, can be very difficult to design and implement, and often lead to disputes. An earnout that has been carefully designed by the parties is worth the upfront effort if it can avoid a dispute or lead to an efficient resolution.

This seminar brings together the perspectives of veteran M&A attorneys with a dispute management director at SRS Acquiom. Our panelists will examine the components of a well-structured earnout and discuss best practices for designing earnouts to minimize disputes.

This seminar will also include insights from the latest ABA Private Target Deal Points Study regarding earnout provisions in purchase agreements, and recent enforcement trends that SRS Acquiom has seen since the start of the pandemic.

This program was recorded on November 12th, 2020.

Provided By

American Bar Association
Card image cap

Panelists

Card image cap

Lisa Hedrick

Partner
Hirschler Fleischer

Lisa’s practice focuses on mergers and acquisitions (M&A) involving privately-held middle market companies across the United States. With transaction sizes ranging from $1 million to $500 million, Lisa provides practical and informed counsel to business founders, family offices and private equity funds for their buy-side and sell-side transactions across multiple industries. Within the past year, Lisa has worked on a number of deals involving representations and warranties insurance (RWI). She is well versed in negotiating RWI policies and structuring deals to accommodate such protection for her clients.

Recently Lisa represented a private equity fund in the acquisition of a distributor from a family office. The transaction involved several third parties including lenders and co-investors and drew heavily on Lisa’s strong project management and organizational skills to complete the transaction under an accelerated timeline.

In addition to M&A transactions, Lisa works with middle market businesses to provide ongoing general corporate counsel and advice. Appreciating that risk is fundamental to every business success-story, Lisa prides herself on educating her clients about the risks involved in a particular transaction and assisting her clients with identifying the best course of action.

Lisa is the current chair of Hirschler’s Recruiting Committee and an active member of the firm’s Women’s Initiatives Network (WIN).

Card image cap

Suzanne L. Saxman

Partner, M&A Chair
Seyfarth Shaw LLP

For more than three decades as a corporate lawyer, Suzie has counseled clients—from entrepreneurs and startups to large, privately held companies across multiple industries—through every phase of growth, during times of economic prosperity and economic downturn.

She prides herself on handling matters "in scale" with an eye toward practical advice that advances company objectives. Suzie works with clients in two capacities: executing deals and functioning as outside general counsel, often at the same time. Her clients benefit from this continuity of service and the institutional knowledge she develops by their side. She knows what it's like to run the business and stays in the trenches with the client after the deal is closed.

Suzie brings substantial legal know-how, a high-volume track record of transactions, and a commitment to speak the language of her clients in every deal. She analyzes complex, confidential, and strategic opportunities to address the legal issues presented. Suzie then translates the opportunity into a quick and responsive action plan that provides a road map for growth. She takes a holistic approach, working across the client organization and bringing in financial, diligence, and client counsel to assemble the deal "dream team."

As chair of the M&A practice group, Suzie drives the growth and professional development agenda for more than 60 attorneys at all levels. She has been an avid consumer of M&A trends for the last decade, making it her mission to bring this knowledge back to the team. Suzie also drives technology adoption for her team, including use of new artificial intelligence tools for client service and the creation of a unique budgeting app used to predict legal fees for transactions. In all things, Suzie sets a model for performance and client service with a goal of supporting and leading a world-class team. This work has made her more well-rounded and better equipped to serve her clients.

Suzie loves working at Seyfarth because it offers something new and different every day, whether it's the opportunity to help her clients meet their goals, or to collaborate with her colleagues and firm leadership to grow the firm.

Card image cap

Paul Pryzant

Partner
Seyfarth Shaw LLP

For over 35 years, Paul has represented clients in a variety of mergers and acquisitions (M&A), equity and debt financings, and other corporate transactions. Regardless of the transaction, he’s learned that the most important part of his job is to listen to his clients’ goals for the deal and help them achieve those goals in a timely and cost-effective manner.

Paul regularly works with entrepreneurs who want to sell or merge their companies, and the buyers of those companies, each of whom faces their own challenges with the transaction.

Entrepreneurs selling their businesses face big challenges, especially when negotiating with a private equity firm or strategic buyer which has purchased numerous companies. The M&A process can be complex for sellers and misguided decisions can have bad consequences. Paul helps sellers successfully and efficiently sell their company, and minimize their potential liabilities to the buyer. He translates the complexities of the M&A process into plain English that sellers can understand, so they can make the right decisions for their company.

Buyers face challenges working with entrepreneurs selling their company, especially when the seller is new to the M&A process and may not be adequately represented by experienced M&A counsel. Paul’s objective is to help the buyers he represents quickly build trust with the target company and their counsel, and help guide the transaction to closing quickly and efficiently. Additionally, he keeps buyers focused on the most important issues found during due diligence, and creatively solves the inevitable problems that arise during a transaction.

For both buyers and sellers, Paul has a long track record of helping the parties uncover and deal with any misunderstandings and other issues that occur before closing. Clients appreciate when transactions go smoothly both before and after closing since post-closing claims can impede both parties from achieving their respective goals.

As part of his practice, Paul regularly works with strategic buyers, and private equity funds and their portfolio companies, to acquire software and other high-tech companies that help his clients obtain new cutting-edge technologies, and add new products and services.

He also enjoys working with emerging growth companies and their angel Investors, from the startup phase through the financing and growth process to the final exit. He serves as the general counsel to the Houston Angel Network (HAN) which has more than 100 angel investors.

Paul loves working at Seyfarth because he can help a wide range of clients achieve their goals, and he gets to work with a talented group of colleagues at the firm who help support him and his clients. Paul also appreciates Seyfarth’s innovative approach to using technology and project management tools to make the practice of law more efficient and economical for clients.

Card image cap

Andrew Noble

Director, Dispute Management
SRS Acquiom

Andrew Noble is a Director of Dispute Management at SRS Acquiom. He works with selling shareholders to resolve post-closing claims for indemnification, earnout and milestone issues, third-party litigation, and other matters that arise after the acquisition has closed.

Before joining SRS Acquiom, Andrew was a litigator at a San Francisco-based law firm where he tried numerous cases on behalf of banks and other financial institutions. Andrew is a former Chair of the California Lawyers Association’s Consumer Financial Services Committee.

Andrew graduated from the University of Washington School of Law and Whitman College. Andrew is admitted to practice law in California and Washington state.

CLE CREDITS

Card image cap

Similar Courses

Card image cap
63 minutes
40 Years of Data: What the Data on the Industry Says About Its Future
For 40 years, The American Lawyer, its affiliate publications and ALM Intelligence’s Legal Compass have been collecting data on law firms, clients and providers. What does the data tell us about where the industry is headed? We will take a deep dive into our data and others’ to assess the state of the industry and its future.

Legalweek

$65

Add to Cart

11 Credit States

More Details
Card image cap
56 minutes
A Comprehensive Guide on SPAC Litigation and Enforcement: Hot Buttons Explored
Join securities law expert Adrienna Huffman (The Brattle Group) as she brings the audience a comprehensive discussion of recent SPAC-related acquisitions.We will delve into an in-depth analysis of the current trends, litigatio nrisks, and provide practical compliance strategies for transitioning private companies amidst a rapidly evolving legal climate.

The Knowledge Group

$75

Add to Cart

11 Credit States

More Details
Card image cap
60 minutes
Alternative Energy & Renewables
This session’s panelists, all of whom have experience in the renewable energy and power sectors, will discuss valuation and other relevant issues in the context of expanding alternative and renewable energy sources, and the pressures this expansion will have on the merchant power sector.

American Bankruptcy Institute

$75

Add to Cart

12 Credit States

More Details
Card image cap
74 minutes
Anatomy of a Pharmaceutical Bankruptcy Case
This panel will present a primer on the U.S. pharmaceutical industry, focusing on the typical capital structures of pharmaceutical/development companies versus in-pipeline companies. The panelists will examine the factors leading to the recent surge in pharmaceutical bankruptcy cases and their outcomes/resolutions, as well as ? 363 sales of pharmaceutical companies’ assets and restructurings. Opiate bankruptcy cases such as Purdue and Mallinckrodt will be highlighted, as will ancillary issues that arise in pharmaceutical bankruptcy cases, such as product recalls, regulatory issues (such as with the FDA) and IP licensing issues.

American Bankruptcy Institute

$95

Add to Cart

12 Credit States

More Details
Previous Next