A successful transaction, requires a successful business lawyer. You want a lawyer to add value to the transaction not muck it up. So, what makes deal whisperer? Adding value to the deal rather than mucking it up is number one reason you need hire value-added business counsel.
My goal as a lawyer is to increase the value of the deal by reducing the transaction costs. Regulatory arbitrage is one of the most common ways to reduce the costs of the deal. Depending on the jurisdiction and regulatory body governing the transaction, structuring the transaction can be done in a shape and form to maximize value. By choosing the best shape and form for the structure of the transaction and safeguarding that courts and regulators will respect that choice, I the transactional lawyer reduce your businesses cost of complying with the law and in turn pass greater value along to you the business owner.
A regulatory arbitrage example may help you to visualize the added value. Let’s say that Big Cheese, Inc., wants to acquire Little Cheese, Inc. Big Cheese want to make the deal so that stock is offered as the form of consideration to be paid to Little Cheese’s shareholders. Big Cheese does not want appraisal rights to make the deal more expensive. Big Cheese rightfully so, wants to make a deal that financially best for the Big Cheese. Big Cheese is not so concerned with the way the cheese changes hands from Big to Little, however, is more concerned with how much is the Little Cheese going to cost Big Cheese? As a transactional lawyer I know that my client is concerned about the business deal and I am concerned about how to make it fit within law.
New Jersey law only permits shareholders to exercise appraisal rights in a merger; appraisal rights are not triggered with an acquisition structured as a sale of assets. In the Big Cheese’s case there is tremendous potential cost savings by avoiding the appraisal rights associated with a merger and structuring the deal as an asset sale. So, if we can make the deal happen as an asset sale, possible dissent (appraisal rights) have been avoided and the deal happens a lower transactional cost.
Another way in perhaps if we were in another state that the appraisal rights may have been avoided is through a reverse triangular merger (not a fancy wrestling move!). Big Cheese, Inc. and Little Cheese, Inc. could structure a merger so that Little Cheese will become an indirect wholly-owned subsidiary of Big Cheese through a reverse triangular merger. This is a transaction where Big Cheese would form and subsidiary let’s say Middle Cheese, Inc, and then merge the subsidiary, Middle Cheese, into the target company, Little Cheese, with the target company being the surviving entity and a wholly-owned subsidiary of the acquiring party (Big Cheese). As you can see there are different approaches to getting a deal done.
Having a business lawyer can help you make the deal happen in a way that makes the most business sense and adding value to the business owner’s bottom line.