How Private Equity Manages the M&A Post-Closing ProcessJune 17, 2014
Buyers of privately-held companies require that sellers appoint a representative of the former shareholders to handle claims for alleged breaches of representations or warranties, working capital adjustments, calculations of earnouts and similar issues. The lead investor in private equity transactions may elect to assume the role because they are familiar with the working capital calculations, and, as often their money is most at risk, they may want to maintain control.
The work can be tedious and serving as the representative can subject that person or fund to legal and financial risks and distractions. The recent ruling in Mercury Systems v. Shareholder Representative Services LLC demonstrates the risks associated with acting as your own shareholder representative.
This paper explores how to mitigate these risks, and how private equity firms can more efficiently manage the post-closing process while retaining complete control. Topics:
• Personal risks and obligations of being a fiduciary
• Litigation risks
• Forming a new company is not a solution
• Retaining control without serving as representative
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About the Author
Paul is an attorney, entrepreneur and co-founder of SRS Acquiom. He manages operations and heads the professional team, all day-to-day operations of the Company, including Business Development, Marketing, Operations and Technology, and our Professional Services group. Paul also oversees our finance and legal operations. Paul practiced law at some of the country’s most prestigious law firms. He represented public, venture-backed and private equity-backed companies in M&A, debt and equity financings, company formations, and securities issuance and compliance. Paul represented many investors in connection with private equity financings and other transactions. Based on this experience, he has a strong understanding of both investment fund operations and the sale of privately held portfolio companies. Paul was one of the founding partners of Kendall, Koenig & Oelsner, a Denver-based corporate and business law firm with a strong practice in mergers and acquisitions, securities and financing transactions. Prior to that, he was an attorney in the Chicago office of Latham & Watkins, and in the Colorado office of Cooley LLP. Paul graduated from Northwestern University School of Law and received his BBA in Finance from the University of Iowa.