Project Management in M&A Transactions: A Proactive, Disciplined Approach

Transcription

1 Project Management in M&A Transactions: A Proactive, Disciplined Approach George M. Taylor, III Burr & Forman LLP Birmingham, Alabama, USA Mark C. Witt Godfrey & Kahn, S.C. Milwaukee, Wisconsin, USA 1

2 Mark C. Witt 780 North Water Street Milwaukee, WI USA TEL FAX Mark is a shareholder in Godfrey & Kahn s Milwaukee office, the co-chairman of its Corporate Practice Group, and is a member of its Management Committee. His practice is focused on mergers and acquisitions, divestitures, financings, private equity, venture capital, joint ventures, and strategic commercial relationships for a number of public and private companies, equity funds and angel groups. Mark has been listed by Chambers USA: America s Leading Lawyers for Business (Corporate/M&A) every year since 2007, The Best Lawyers in America (Corporate Law, Leveraged Buyouts and Private Equity Law, and M&A) every year since 2009, Wisconsin Super Lawyers every year since 2010, and Leading Lawyers (Corporate and Mergers & Acquisitions) every year since Mark speaks frequently on a variety of M&A topics, including a speech in May of 2014 at the Wisconsin Association for Corporate Counsel Annual Conference on strategies for in-house counsel in divestitures. Mark serves on the Board of Directors and as Chairman of the Programs Committee for the Wisconsin Association for Corporate Growth. Mark also serves on the Board of Directors, the Finance Committee and the Quality Committee for the Children s Hospital and Health System in Milwaukee, Wisconsin. Mark received his B.A. (Political Science) from Stanford University in 1991 and his J.D. from the University of Michigan Law School in

3 George M. Taylor th St., North, Suite 3400 Birmingham, Alabama USA TEL FAX George is a partner in Burr & Forman s Birmingham office and serves as firm-wide head of the Corporate Section, which includes the Corporate, Banking and Bankruptcy Practice Groups. His practice focuses on representing corporate and commercial clients with an emphasis on the automotive industry and health care entities. He has handled the acquisition and sale of numerous businesses, including automobile dealerships, manufacturing businesses, and hospitals and related entities. George is listed as a leading practitioner in the current edition of the Chambers USA America's Leading Lawyers for Business. George was named by Law Dragon Magazine as one of the 500 Leading Dealmakers in America, is listed in The Best Lawyers in America in the fields of Corporate Law and Mergers and Acquisitions and is in Alabama Superlawyers. He lectures frequently on various topics, including the acquisition and merger of business entities, successor liability in asset transactions and the use of technology in M&A practice. He was a contributing author of the recently-published American Bar Association publication, The M&A Process: A Practical Guide for the Business Lawyer, and was a member of the Editorial Board for the Revised Model Stock Purchase Agreement, with Commentary, published by the American Bar Association in He is also co-author of the BNA Corporate Practice Series treatise Negotiated Acquisitions. George attended the University of the South, Sewanee, Tennessee, from 1971 through 1975 and received a Bachelor of Arts in Economics, summa cum laude, in May, He attended Vanderbilt Law School from 1975 through 1978 and received the degree of Juris Doctor in June, He was a member of the Order of the Coif and on the editorial board of the Vanderbilt Journal of Transnational Law. After law school, he clerked for Chief Judge Frank McFadden of the U.S. Court for the Northern District of Alabama.

4 The exercise begins with an unusual RFP: Indicate the number of dedicated legal project managers employed by your firm Indicate the number of dedicated legal project managers that your firm will commit to providing on our matters Describe the key tasks performed by your firm s legal project managers What are the quantifiable benefits to be achieved by utilizing legal project managers on these projects? 4

5 Unless you are one of the tiny percentage of firms that has implemented a program of Legal Project Management, you have no idea how to respond to that question. 2 Non-Users Firms Using LPM It s time to catch up! 5

6 Today s (brief) presentation: What is Legal Project Management? What are its benefits? Uses in the world of M&A Specific aspects: (i) scoping, (i) budgeting, (iii) organizing the work, (iv) staffing and (v) achieving result Legal Project Management in Terralex transactions 6

7 Legal Project Management: The application of modern principals of business administration and project management to a specific transaction or proceeding 7

8 Sources of the Trend to LPM Project management techniques developed in the 50 s and 60 s in the aerospace, defense, and construction industries Hard skills such as budgeting and scheduling were coupled with soft skills such as communication and team building Businesses increasingly view project management as a core competency and trend spread to other industries Legal organizations increasingly adopt best practices from other industries Clients expect us to approach projects with the same methodology and language as they do 8

9 Examples of LPM Elements: Initial Scoping of Services Initial and updated budgeting based on elements of project Use of Gantt charts to chart progress More efficient use of staff Legal project management software (e.g., ENGAGE) Use of Certified Project Management Professionals Reconfiguring services to meet business planning and formatting Direct communication methods 9

10 Benefits to the Client: Greater Predictability Timing Budgetary Better Communications: (i) timing, and (ii) use of strategies customary for the business Efficiency Quality Improvement Generally, services in line with corporate structure speaking the same language 10

11 Benefits to the Firm: More cohesive relationship with client; teamwork Efficiency of Services Fewer write-offs Greater revenues; profitability Better Communications with Client Improved Firm Management Quality Improvement Business Development; Differentiation Not necessarily as painful as you would think. 11

12 Challenge Idea: Isn t this the same thing that lawyers have been doing for years? Somewhat true But while we have used basic management skills for years, there is more going on here Clients expect the language and concepts to change More deliberate planning Use of management tools and procedures in a more deliberate manner More importantly, clients are increasingly concerned not with cost and result but with the process used to achieve the result 12

13 Elements of Legal Project Management Define success Break down the work into phases and tasks Budget and Plan Assemble the team Manage the Project: Monitor Adjust Communicate 13

14 LPM Simplified (or not) Financial Planning Breakdown Into Components Management Engagement/ Scoping Budget Timeline Staffing Communicate With Client Project Completed 14

15 In M&A Transactions, many of these elements have always been addressed Financial Planning Breakdown Into Components Management Engagement/ Scoping Budget Timeline Staffing Communicate With Client Project Completed 15

16 In M&A Transactions, some elements are simple: Much budgeting is done on a lump sum basis, but the scope of services can be critical to a successful budget M&A practitioners have been preparing closing timetables for years We have always made staffing decisions, but more precision is required to work to the budget 16

17 Sometimes developing a satisfactory LPM timeline means no more than converting a typical closing timetable into a Gantt chart Tasks Start Date Duration End Date Letter of Intent 1-Jan Feb Binding Agr 1-Feb 30 1-Mar Due Diligence 1-Mar 60 1-Jun Financing 1-Mar 30 1-Apr Licenses and Permits 1-Mar Apr Employment Matters 1-Mar 30 1-Apr Intellectual Property 15-Mar 45 1-Jun Third-Party Agr 1-Apr 90 1-Jul Closing Docs 1-May 60 1-Jul Closing 1-Jul Jul 17

18 Proper scoping of an engagement is a critical first step Financial Planning Breakdown Into Components Management Engagement/ Scoping Budget Timeline Staffing Communicate With Client Project Completed 18

19 What is Effective Scoping? Initially: Discuss client s key goals and objectives, and timing Identify key stakeholders at client, their role and the timing of their involvement Determine (as detailed as possible) what your firm will do and not do ( Scope of Work or Project Charter ) Develop budgets based on Scope of Work Ongoing: Communication on progress against Scope of Work Address scope changes throughout transaction At end of transaction, discussion of lessons learned and impact on future Scopes of Work 19

20 What Should a Scope of Work Address? Identification of primary action items in transaction, which of these items the law firm will do, and which of the items identified other parties will do Key milestones and dates Fee arrangement / estimates / budgets Key stakeholders and advisors involved in transaction Primary risk factors Assumptions Communication procedures 20

21 Benefits of Proper Scoping : Fewer Write-offs Reduce the probability of substantial write-offs, which often are caused by: Lack of communication at outset to clarify expectations Failure to address assumptions Lack of internal communication to limit services to inscope items Failure to identify and address scope changes Client assumptions that changes in scope were in original scope Failure to manage project to scope 21

22 Other Benefits of Proper Scoping Manage scope creep Creates more realistic expectations at outset, helps the client prepare, and can even expand the scope of work Allows attorney to better understand the client s goals Forces transaction team within law firm to be better prepared and more focused on process Assists with internal resource allocation at law firm Useful roadmap for new transaction team members, and good record for the next deal Protects law firm against malpractice liability for items outside of scope 22

23 Example of Scoping Documentation: ABA Smart Scoping Forms Outline of initial scoping conversation Letter agreement regarding scope Deal management discussion outline Allocation of tasks among team members Status report 23

24 Conclusions: We are just at the beginning of the LPM trend; you ll be hearing more of this from multiple sources While lawyers already manage projects on a daily basis, use of modern management techniques is not at a level acceptable to clients Both existing and prospective clients will expect to hear about LPM skills from competent lawyers An effective LPM plan, includes effective use of all the elements of planning, budgeting, and management Proper use of management techniques has derivative benefits to the law firm (more competitive and more efficient) The language of management may be as important as the skills: Clients now expect to approve not only the work done but the process by which it is done 24

25 The Real Importance of LPM: To remain competitive, legal-service providers will need to develop LPM processes, mapped to international projectmanagement standards, that consider and profit from an environment in which they may provide their services as part of a multidiscipline, multinational, multi-organizational team of law firms, legal-process-outsourcing companies, litigationsupport vendors, legal-staffing agencies, consultancies and the client s internal stakeholders. Paul C. Easton, Global Colleague, LLC 25

26 Project Management in M&A Transactions: A Proactive, Disciplined Approach Questions? 26

27 Project Management in M&A Transactions: A Proactive, Disciplined Approach George M. Taylor, III Burr & Forman LLP Birmingham, Alabama, USA Mark C. Witt Godfrey & Kahn, S.C. Milwaukee, Wisconsin, USA 27