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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. Some are above the law in Indiana. Some lined up with Lodges have controlled power in the state since the 1920s when the Klan ruled Indiana. Consider the comments at this post and note the international h.q. in Indianapolis. http://www.theindianalawyer.com/human-trafficking-rising-in-indiana/PARAMS/article/42468. Brave journalists need to take this child torturing, above the law and antimarriage cult on just like The Globe courageously took on Cardinal Law. Are there any brave Hoosier journalists?

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  3. This is the dissent discussed in the comment below. See comments on that story for an amazing discussion of likely judicial corruption of some kind, the rejection of the rule of law at the very least. http://www.theindianalawyer.com/justices-deny-transfer-to-child-custody-case/PARAMS/article/42774#comment

  4. That means much to me, thank you. My own communion, to which I came in my 30's from a protestant evangelical background, refuses to so affirm me, the Bishop's courtiers all saying, when it matters, that they defer to the state, and trust that the state would not be wrong as to me. (LIttle did I know that is the most common modernist catholic position on the state -- at least when the state acts consistent with the philosophy of the democrat party). I asked my RCC pastor to stand with me before the Examiners after they demanded that I disavow God's law on the record .... he refused, saying the Bishop would not allow it. I filed all of my file in the open in federal court so the Bishop's men could see what had been done ... they refused to look. (But the 7th Cir and federal judge Theresa Springmann gave me the honor of admission after so reading, even though ISC had denied me, rendering me a very rare bird). Such affirmation from a fellow believer as you have done here has been rare for me, and that dearth of solidarity, and the economic pain visited upon my wife and five children, have been the hardest part of the struggle. They did indeed banish me, for life, and so, in substance did the the Diocese, which treated me like a pariah, but thanks to this ezine ... and this is simply amazing to me .... because of this ezine I am not silenced. This ezine allowing us to speak to the corruption that the former chief "justice" left behind, yet embedded in his systems when he retired ... the openness to discuss that corruption (like that revealed in the recent whistleblowing dissent by courageous Justice David and fresh breath of air Chief Justice Rush,) is a great example of the First Amendment at work. I will not be silenced as long as this tree falling in the wood can be heard. The Hoosier Judiciary has deep seated problems, generational corruption, ideological corruption. Many cases demonstrate this. It must be spotlighted. The corrupted system has no hold on me now, none. I have survived their best shots. It is now my time to not be silent. To the Glory of God, and for the good of man's law. (It almost always works that way as to the true law, as I explained the bar examiners -- who refused to follow even their own statutory law and violated core organic law when banishing me for life -- actually revealing themselves to be lawless.)

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