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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. All the lawyers involved in this don't add up to a hill of beans; mostly yes-men punching their tickets for future advancement. REMF types. Window dressing. Who in this mess was a real hero? the whistleblower that let the public know about the torture, whom the US sent to Jail. John Kyriakou. http://www.nytimes.com/2013/01/26/us/ex-officer-for-cia-is-sentenced-in-leak-case.html?_r=0 Now, considering that Torture is Illegal, considering that during Vietnam a soldier was court-martialed and imprisoned for waterboarding, why has the whistleblower gone to jail but none of the torturers have been held to account? It's amazing that Uncle Sam's sunk lower than Vietnam. But that's where we're at. An even more unjust and pointless war conducted in an even more bogus manner. this from npr: "On Jan. 21, 1968, The Washington Post ran a front-page photo of a U.S. soldier supervising the waterboarding of a captured North Vietnamese soldier. The caption said the technique induced "a flooding sense of suffocation and drowning, meant to make him talk." The picture led to an Army investigation and, two months later, the court martial of the soldier." Today, the US itself has become lawless.

  2. "Brain Damage" alright.... The lunatic is on the grass/ The lunatic is on the grass/ Remembering games and daisy chains and laughs/ Got to keep the loonies on the path.... The lunatic is in the hall/ The lunatics are in my hall/ The paper holds their folded faces to the floor/ And every day the paper boy brings more/ And if the dam breaks open many years too soon/ And if there is no room upon the hill/ And if your head explodes with dark forbodings too/ I'll see you on the dark side of the moon!!!

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