Engaging in business transactions in today’s rapidly evolving global marketplace demands superior ingenuity and attention to detail. Technology, new trade pressures, economic uncertainties, and cumbersome regulatory regimes (to name a few) have transformed the way large corporations approach transactions. This has, in turn, caused astute corporate lawyers to rethink their approach to corporate and M&A transactions. To better understand some of these changes and how they are impacting deal-making throughout the world, we asked the distinguished M&A lawyer, Richard W Silverthorn, to discuss his view of the deal world and his philosophy for approaching transactions. Silverthorn is a corporate and M&A specialist at the 68-year-old law firm of Whyte Hirschboeck Dudek S.C. (WHD), which is headquartered in Milwaukee, Wisconsin, US.
According to Silverthorn, “Now, more than ever before, the role of a corporate lawyer is similar to that of a quarterback in a game of American football. He is responsible for coordinating the entire transaction from inception to closing. He is also the primary person in charge of liaising directly with clients to assess their desires and objectives, and negotiate the transaction with these objectives in mind.”
With the increasingly complex issues that arise in today’s M&A transactions, the lead corporate lawyer in any transaction needs to be comfortable managing the many players involved in the deal. “It is not uncommon for a large M&A transaction to involve several area-specific experts, such as tax, employee benefits, labour/employment, antitrust, regulatory and environmental lawyers, as well as financial and insurance advisors,” says Silverthorn. “If the lead corporate lawyer mismanages any of these relationships, or fails to involve the appropriate legal specialists, the outcome of the transaction could suffer, and that is simply unacceptable.”
For this reason, he believes that clients should not look for a lawyer who simply “knows the law,” but instead find a lawyer who has also mastered the art of coordinating a transaction from start to finish.
Silverthorn knows a thing or two about M&A deals. For the past two decades he has represented several national and international companies in sophisticated corporate and M&A transactions, both domestically and internationally. Throughout this process, he has seen his practice evolve to match the demands of the marketplace and the needs of his clients. As Silverthorn explains, each transaction is different, and requires corporate practitioners to analyse the circumstances surrounding each deal before recommending the best way to proceed.
“Identifying up-front the issues inherent in a given transaction and the risks associated with those issues can be quite intricate, and requires continual monitoring of the legal landscape,” he says. “Certain issues are present in all transactions, but other issues arise on a case-by-case basis; and can be the result of a unique set of circumstances of a particular deal, or the result of new laws, new regulatory developments, environmental circumstances, or antitrust concerns. Being able to identify and effectively respond to these issues is what separates a good deal lawyer from a great one.”
Strategic considerations in M&A
The corporate lawyer is often the first point of contact for clients. Silverthorn believes it is that initial contact that helps congregate the various facets of a particular transaction. A good lawyer will be able to recognise the difference between a strategic and a financial buyer at the outset of a transaction, and plan accordingly. Silverthorn notes: “Understanding whether the transaction is being approached for long-term value creation as part of an overall strategic plan or for short-term financial gain will help a lawyer serve his client’s needs more effectively.”
It is the job of a transactional solicitor to craft and implement strategies to address fundamental tactical considerations, because “anticipating these issues and planning ahead is critical to a successful M&A transaction, and that’s why clients need experienced legal representation,” he says.
At the outset, the parties involved must weigh the advantages and disadvantages of the different possible structures of the transaction, as this decision will have an effect on several issues, including the assumption of liabilities, the tax consequences to the parties, and the requisite corporate, third party, and governmental consents and approvals necessary to consummate the transaction.
Also high on the list of priorities, according to Silverthorn, is performing a thorough due diligence review that will identify potential transaction risks, and help minimise or eliminate post-closing surprises. “Identifying the potential risks of a transaction is a critical function of the due diligence process, and the outcome of the negotiations over the allocation of these risks between the parties needs to be reflected in the definitive purchase agreement,” Silverthorn says.
Analysing the macro and micro elements of a transaction
Silverthorn truly knows how to structure and negotiate successful corporate transactions, and it is this awareness that wins him commendations from peers and clients alike. According to one, he “has an impressive command of corporate legal issues, and is a master of negotiation strategy.” Clients have also noted that “his pleasant demeanour is well-suited to conducting complex and long-winded contract negotiations.”
The WHD lawyer knows that clients do not just want to hear about laws and regulations: “What they need is a combination of highly technical yet practical legal counsel that fits the transaction at hand,” he says. “An in-depth understanding of the transaction is essential to ensure that the big picture, as well as the smaller details, are thought through and addressed properly.”
The distinguished Milwaukee-based lawyer has received accolades from clients who judge him to be “organised, determined and meticulous” in his approach to handling high-profile corporate and M&A transactions. Silverthorn knows today’s fast-moving economic climate well. He explains that many lawyers know and understand the law, but not all lawyers will look at an issue from all angles in order to deal with both the macro and the micro aspects of a business transaction. “The macro view revolves around the manner in which the transaction is structured, the overall allocation of risks and responsibilities between the parties, and the approach to significant regulatory hurdles.
The micro element, on the other hand, is the comprehensive analysis of deal-specific issues and how these issues are reflected in the definitive purchase agreement.”
Silverthorn is of the opinion that a comprehensive analysis is of extreme significance to a successful transaction, especially since the laws and regulations relating to M&A transactions are becoming increasingly complex. “There are more regulations than ever before, and the need for good corporate lawyers has never been greater.”