Doing a roll-up or consolidation play is more than just repeated M&A. It requires a holistic approach that requires planning, planning and more planning.

1. What is a Consolidation Practice?
A Case Study
Presented by Bart Greenberg
Manatt, Phelps & Phillips, LLP
For the Inland Empire Business Forum

2. What is a Consolidation Practice?
It is Much More that Numerous, Repeated Acquisitions
It is a Holistic and Integrative Approach to each of the
Following:
Acquisitions
Financings
Real Estate Leases
Other Material Contracts
The Following Case Study Is Illustrative of this Point:

3. In the Beginning . . .
Holding Company
X

4. What Happened Next?
35 Acquisitions
18 Stock Purchases
17 Asset Purchases
Financings
Seller Financing
Secured
Unsecured
Preferred Stock Financings
Mezzanine Debt Facilities
Vendor Assisted Financing
Secured
Unsecured

5. The Resulting Corporate Structure
Holding Company
A B C
X Y
D E F G AA BB
H I J K CC DD
EE FF
1 2 3 4
GG HH
5 6 7 8
II JJ
9
KK LL

6. The First Restructure
Goals:
Correct Corporate Structure
Certain Subsidiaries at Wrong Level
Simplify Overall Corporate Structure
Confusion from Operational Perspective
Confusion from Investor Perspective
Reduce Costs Associated with Structure
Legal Cost of Separate Entities
Liability Risk of Many Entities
Not Chase Any Third Party Consents

7. After First Reorganization
Holding Company
X Y
D E F G H AA BB
CC DD
1
EE FF
GG HH
II

8. What Happened Next?
6 Acquisitions
1 Stock Purchase
5 Asset Purchases
Financings
Seller Financing
Unsecured
Preferred Stock Financing
Vendor Assisted Financing

9. The Resulting Corporate Structure
Holding Company
X Y
D E F G H I AA BB
CC DD
1
EE FF
GG HH
II

10. The Second Restructure
Goals:
Two of the Same as the First Restructure
Simplify Overall Corporate Structure
Reduce Costs Associated with Structure
Prepare for Anticipated Credit Facility
Not Chase Any Third Party Consents

11. The Resulting Corporate Structure
Holding Company
X Y
D E F H I AA BB CC
1

12. The Anticipated Credit Facility
New Lender Requested Company to Transfer Secured Assets
of Company “Y” (constituting 10 facilities) to Newco
Legal Issues to Effect Drop-Down of Assets:
Only One Landlord Consent
Notice Only to Four Other Landlords
“Notice” to one Secured Creditor

13. The Resulting Corporate Structure
Holding Company
X Y
D E F H I Newco
1 AA BB CC

14. The Credit Facility
No Consents Required

15. Lessons to Be Learned

16. Planning, Planning and Planning
Some Key Considerations:
Broad Prospective Consent of Creditors to Subordination
Relaxation of Typical Negative Covenants on the Following:
Mergers and Restructurings
Investments in Subsidiaries
Certain Transfers of Collateral
Broad Flexibility to Conduct Transactions with Affiliated
Persons
In Sum, LEGAL Planning for All Anticipated Possibilities of
Growth

17. Thank you!