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Changing times change mergers and acquisitions practice

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In the manufacturing hub of Elkhart, attorney Mike Pianowski has noticed the mergers and acquisitions market rebounding.

His firm, Sanders Pianowski LLP, closed four deals at the end of 2012, another at the beginning of this year, and has six negotiations ongoing currently. Of the seven partners at the firm, five often work on mergers and acquisitions along with several associates.

This is work that has come knocking on his door. Even while his firm stands in the northern Indiana market that includes larger, national law offices, Sanders Pianowski does not advertise for business.

“We don’t really compete,” he said. “Everybody’s busy.”

birge Birge

Pianowski is not the only one seeing an uptick in the market.

The M&A community has observed the same thing, said James Birge, partner at Faegre Baker Daniels LLP in Indianapolis. This segment of the economy is robust, and lawyers helping with the sale of businesses have a lot more work.

Birge talked about the mergers and acquisitions segment of the economy at the Faegre Baker Daniels’ 2013 M&A Conference held June 4 in Indianapolis. The seminar included panel discussions on such topics as the current trends in the market, how to prepare a company for sale and carve outs.

A total of 227 attended the M&A conference that is believed to be the first of its kind in Indiana. Lawyers, investment bankers, private equity specialists and accountants from across the state came to the event. Panelists traveled from other Midwestern locations such as Chicago, Milwaukee and Minneapolis.

Birge began organizing the conference last year. The local M&A community has long been talking about the need for Indiana to have a gathering similar to the ones held in other parts of the country. Birge, who concentrates his practice on corporate transactions and economic incentive programs, decided to take on the task.

More than just a time to learn about trends and challenges in the marketplace, Birge said the conference offered an opportunity to network, bringing potential buyers together with interested sellers.

While the M&A market is recovering, it remains well short of its peak in 2007. Buyers and sellers are a little hesitant to take on additional risk, said Kyle Hupfer, an attorney in the M&A practice group at Frost Brown Todd LLC in Indianapolis. More significant, banks are keeping tight reins on financing.

When confidence returns, deals will likely increase, he said. An uptick could be fueled by the piles of cash corporations are sitting on as well as some possible pent-up demand.

An indication of this hesitancy may be the rise of earnouts, a type of agreement where the purchase price is contingent on the future financial performance of the business. Jeff Brown, partner at Faegre, moderated the panel discussion on this topic.

According to Brown, an estimated 16 percent of the mergers and acquisitions deals in 2008 had earnout provisions. That grew to 26 percent in 2011, and he anticipates the percentage will be higher in 2012.

This method of buying a business is also evidence of what Pianowski sees as the growing sophistication in the market.

He remembers a time when buyers and sellers of businesses trusted their gut feelings. Deals were done by a handshake with the financials scrawled on a paper napkin or the back of the bill for lunch.

brown Brown

Today, while investors may still rely on their intuition, they verify. The buying and selling of businesses is much more complicated. Worries arise over potential environmental contamination, warranty claims, employment issues, multi-state operations and cross-border shipping as well as intellectual property.

Another indication of the increasing complexity in mergers and acquisitions is the number of international transactions. Indianapolis is just one example of an American city that has fostered and strengthened its global ties.

This has changed how lawyers practice, Brown said. In previous days, attorneys who did international mergers and acquisitions were filling something of a niche. Now, all attorneys in this practice area do global deals.

Although the sophistication along with the rebounding economy does create more work for attorneys, Pianowski said the end goal remains the same.

“We want our buyers and sellers, once the deal is done, to be able to sleep at night,” he said. “We don’t want any surprises.”

Increases in mergers and acquisition deals spur jobs and growth. They also provide direct benefit to the M&A community that includes the lawyers who help put the deals together.

In the short term, Hupfer said this means more work for lawyers. However, it’s uncertain if in the long term this additional work would lead law firms to hire more attorneys.•

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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