The Jungle - going global in 2016 from soup to nuts

www.dlapiper.com 0April 2016
April 2016
ACC SF BAY AREA -THE JUNGLE
Mogli meets the girl in the village next door –
Your M&A deal that you thought was all happening in
Silicon Valley goes abroad

 Speaker introductions
 Issues commonly seen in international M&A transactions:
– Corporate and transaction structure
– Regulatory, antitrust and compliance
– Employment
– Tax
– Intellectual property and technology
 Takeaways
 Questions
Agenda

Speaker introductions
Louis Lehot
Partner, Corporate,
Securities and M&A
DLA Piper
T +1 650.833.2330
M +1 650.796.7280
louis.lehot@dlapiper.com
Brian Wheeler
Partner, Corporate,
Securities and M&A
DLA Piper
T +1 650.833.2180
M +1 650.960.6005
brian.wheeler@dlapiper.com
Sherman Chu
Partner, Corporate,
Finance
DLA Piper
T +1 650.833.2346
M +1 408.966.1060
sherman.chu@dlapiper.com
Ute Krudewagen
Partner,
Employment
DLA Piper
T +1 650.833.2245
M +1 650.521.4103
ute.krudewagen@dlapiper.com
Idan Netser
Partner, International
Tax Counsel
DLA Piper
T +1 650.833.2150
M +1 650.862.8293
idan.netser@dlapiper.com

Hypo # 1
 Buyer, a Delaware corp headquartered in Silicon Valley,
is a leading global provider of telecommunications
equipment and trades on the NYSE
 Buyer is a US government contractor
 Buyer plans to acquire the target group (also a leading
provider of telecommunication equipment) that is a
private VC-backed Delaware corp headquartered in
Silicon Valley and has operations in the US, Europe and
China. Target does not have entities in every jurisdiction
in which it operates
 Buyer cannot decide whether to purchase stock or
assets of target and how to structure the deal (in cash or
in stock)
Corporate

 Key issues – structure
– Transaction structure: stock deal vs asset deal
– Foreign entities structure (subsidiary, sister co., branch, etc.)
or the lack thereof
– Bulk transfer laws applicable to transfers of assets
– Financing of the transaction
– what currency to borrow
– currency convertibility
– hedging risks
– use of foreign cash
– Applicability of WARN Act or similar non-US laws
– Deferred or contingent consideration
Corporate

 Key issues – consideration: cash or stock
– Securities regulation in US and foreign
countries (e.g., intl. blue sky)
– Potential stockholder approval for issuance
of shares (e.g., 20% rule)
– Volatility of buyer stock price
– Interest rate risk vs currency risk
– Foreign currency exchange control and
convertibility
– Use of non-US cash
– Accelerate unvested equity; equity rollover
Corporate

 Key issues – approvals
– Foreign investment control / governmental approval
– Antitrust/competition authorities (EU, MOFCOM,
national regulation, etc.)
– Registration/license to do business in a foreign
country
– US export licenses
– Effect on buyer’s status as a governmental
contractor
Regulatory, antitrust and compliance

 Key issues – diligence
– Alphabet soup…FCPA, OFAC, AML, ITAR and
EAR issues
– PRC: CCCi, certificate of origin
– Political / market access issues…
– Good standing status in foreign jurisdictions
– Lien / litigation / tax searches, or the lack of a
reliable source thereof
Regulatory, antitrust and compliance

Global employment in the jungle
Hypo # 2
 Upon acquisition of target, buyer plans to retain
certain key employees (who are critical for the
business)
 Buyer also plans to downsize operation in Europe
and relocate some employees to other jurisdictions
 Buyer plans to expand the business in China
 Buyer discovered during diligence that target group
relies heavily on the service of independent
contractors and agency workers

Key employment issues in global M&A
 Retaining key employees (carveout, bonus, clawback)
 Transferring employees
 Labor unions, works councils, other collective groups, CBAs
 Employees misclassification and (mis)use of alternative workers
 Outstanding liabilities to employees (e.g., vacation, variable compensation)

Key employment issues in global M&A (cont’d)
 Assumption of pension and other benefit plans
 IP assignment
 Immigration status, expat employees
 Severance liabilities and restrictions on terminations and relocations
 Early planning of global alignment and integration (GAIN)
 Data privacy

Agency
workers
 permissible
 limitations on time
or type
 equal pay
obligations
 equity
compensation
Employees
 local corporate
presence required
 payroll registrations
 benefits
 fixed term contracts
 equity compensation
PEO
employees
 are joint
employees and
need to comply
with all applicable
employment laws
 Permissible
 Agency worker
rules
 equity
compensation
Independent
contractors
 what quacks like a
toucan is a toucan
 withholding
obligations (VAT,
GST)
 registration
obligations
 sales agent rules
 equity
compensation
Global employment in the jungle:
expanding to new jurisdictions
Step 1: Pick the right animal

Payroll
 Local hires
 Expat employees
Benefits
 Mandatory (law, CBA)
 Optional
Onboarding
requirements
 Workers’ compensation
equivalent
 Pre-hire medical tests
 Background tests
Employment
agreements
 Requirements
 Language
 PIIA
 Specific terms
Policies
 Required work rules and
internal regulations
 “Global” policies (e.g.,
code of conduct)
 Local policies (e.g.,
disciplinary and
grievance procedure)
Exit strategy
 No at-will employment
internationally
 Probationary periods and
performance
management
 Redundancies and
performance
terminations
Step 2: Master various steps to tame the animal
Global employment in the jungle:
expanding to new jurisdictions

Hypo # 3
 Target has offices in California, Europe and China
 Software for the key products is developed in
Ukraine and China
 Hardware is manufactured in China
 Design, marketing and sales, together with exec
team, is in California
 All employees in US and China signed standard
PIAA agreements
 All inventions are patented in US
 Trademarks and copyrights registered in the US
Intellectual property

 Key issues
– Protection of IP in foreign jurisdictions
– Operation of PIAAs under non-US laws
Intellectual property

Hypo # 4
 Same startup, except India related party owned 50/50
directly by two founders
 Founders are not US citizens and have not made §
83(b) elections, but one of them recently moved to the
US on a non-immigrant visa
 Intragroup contracts provide for only nominal
consideration or no consideration at all
 The final product is sold by and shipped to buyers in
US, Europe and Asia
Tax

 Key issues
– Use of debt v. equity, or offshore cash
– IP: nature, quality, location, utilization, buyer’s IP structure and the
transfer of purchased IP
– Intercompany relationships (transfer pricing)
– Use of earnouts/deferred purchase price consideration and related tax
implications
– Other important tax issues:
• Branch tax and PE exposure
• Quality of foreign taxes paid and the availability of foreign tax credits
• § 83(b) elections, tax withholding and documentation
• CFC, PFIC
• Sales tax / VAT registration requirement and handling
• Practical considerations
Tax

 Consider structure and regulatory framework
implications early
 Drive efficiencies through structure
 Simplicity is a virtue…great is the enemy of the
good
 Thorough diligence process with counsel in
each jurisdiction
 Seek practical solutions…with big picture in
mind
 Do not under-estimate the importance of culture
 Integration is harder than acquisition…visualize
how it will work now
Takeaways

Questions from the audience
and panelists comments…
followed by shameless
propaganda 

 Louis Lehot advises late-stage emerging private, going public and
public companies and their investors in forming, financing, building,
scaling and achieving liquidity for technology, healthcare, energy
and innovative businesses.
 Louis’ recent emerging private company clients have included
AdKnowledge, Inc., AdoTube (acquired by Exponential Interactive),
Binatone Global (buyer of Motorola Mobility’s companion products
business), CheckALT (buyer of Diebold's check processing
business), Centric Software, Docea Power (acquired by Intel),
Double Beam (acquired by Verifone), Kerensen Consulting
(acquired by salesforce.com) and MetricTest (acquired by
Microlease plc), and public company clients including CBRE, CHC
Helicopter, Hanwha Q Cells, MMI Technologies, Model N,
Samsung, Seagate, SK Planet and STMicroelectronics.
 Louis’ institutional and fund clients have included venture capital
firms Foundation Capital, Hony Capital, NEA and Oak Investment
Partners, private equity firms Cetus Capital, Silver Lake Partners
and Hellman & Friedman and corporate venture funds at CBRE,
CSR plc, GE, Hanwha, Samsung and SK Planet.
Louis Lehot
Louis Lehot
Partner
T: +1 650 833 2330
F: +1 650 687 1223
louis.lehot@dlapiper.com
Education
Boston College Law School J.D.
Georgetown University B.S.
Institut d'Etudes Politiques de
Strasbourg (France) C.E.P.
Admissions
California
New York
Silicon Valley Office
2000 University Avenue, East Palo
Alto, California, 94303-2214

 Brian Wheeler focuses his practice on public and
private mergers and acquisitions, joint ventures,
strategic alliances, corporate governance and
financial advisor representations. He also has
extensive experience in cross-border M&A
transactions.
 Brian’s work encompasses a wide variety of
industries, including technology, pharmaceuticals,
medical devices, telecommunications, energy and
financial services.
Brian Wheeler
Brian C. Wheeler
Partner
T: +1 650 833 2180
F: +1 650 687 9288
brian.wheeler@dlapiper.com
Education
New York University School of Law
J.D.
Robert McKay Scholar
B.A., University of Chicago
General Honors
Waseda University, one-year study
abroad program
Admissions
California
New York

 Sherman Chu focuses his practice on China and US-based
(including cross-border) technology transactions, joint ventures,
strategic alliances, complex intellectual property and commercial
agreements, and open source. Sherman advises Chinese and US
companies on effective structuring and operationalizing
transactions to gain approval on regulatory requirements such as
CFIUS, export control and anti-corruption.
 Sherman joined DLA Piper from Cisco, where he oversaw major
legal functions of the company with teams of 20 or more attorneys.
He served as General Counsel for the Greater China region for six
years. Prior to that, Sherman was head of Cisco’s worldwide
transactions practice for ten years, where he was responsible for
supporting mergers and acquisitions, strategic alliances,
intellectual property and other transactions as well as overseeing
antitrust and open source practice areas. In addition, he was also
elected to the position of
Vice-Chairman of the American Chamber of Commerce in
Shanghai, where he represented the interests of a range of
businesses in the US and China on legal and political issues.
Sherman Chu
Sherman Chu
Partner
T: +1 650 833 2346
sherman.chu@dlapiper.com
Education
J.D., New York University School of
Law
B.A., Columbia University
Admissions
California

 Ute Krudewagen focuses on providing multinational
companies with solutions to the challenges presented in
managing a global workforce. In addition, she counsels
companies on employment issues triggered by cross-border
transactions.
 Ute advises international and cross-border clients on a broad
range of complex global employment matters, serving as
trusted advisor and managing international counsel for a
broad range of multijurisdictional and multidisciplinary
projects. Her vast experience includes advising on global
background checks, employment and independent
contractor agreements, discrimination and harassment
claims, social media issues, global policies and procedures,
non-compete and proprietary information agreements, works
council and union issues, codes of conduct and social
responsibility, workplace privacy, employee assignments and
global mobility programs, global reductions in force,
restructurings and severance and retention plans.
Ute Krudewagen
Ute Krudewagen
Partner
T: +1 650 833 2245
F: +1 650 687 1245
ute.krudewagen@dlapiper.com
Education
University of California at Berkeley
LL.M.
University of Cologne J.D.
University of Cologne Dr. iur.,
summa cum laude
Admissions
New York
California

 Idan Netser focuses his practice on all areas of international
taxation, including US international corporate and
partnership taxation, transfer pricing, Subpart F, foreign tax
credits, tax planning and restructuring, international IP
exploitation, international joint ventures and M&A
transactions and tax controversy.
 Idan graduated from the Naval Academy in 1998, with
distinction, and from the Naval Advanced Command course
in 2001. He served as the Commander of the Identification,
Navigation and Communication squadron as well as in
different naval command positions on board a missile frigate
and led international naval operations in collaboration with
NATO. He currently holds the rank of Lieutenant-
Commander and continues to serve in the Naval Reserves.
Idan Netser
Idan Netser
Partner
T: +1 650 833 2150
F: +1 650 687 1105
idan.netser@dlapiper.com
Education
LL.M., International Taxation,
University of Michigan Law School
2008
LL.B., Tel Aviv University 2006
magna cum laude
Editorial Board, Tel-Aviv University
Law Review
B.A., Economics, Tel Aviv University
2006
Naval Academy, 1998
with distinction
Admissions
California

DLA Piper Overview
DLA Piper has “led in listening
to clients and positioning itself as
a business-led law firm.”
Financial Times, October 2, 2015
“…2015 has seen the firm take
major steps toward forging a
long-planned presence across
the Americas.”
Law360, July 6, 2015
DLA Piper has “become really
aggressive in the thought
leadership arena, and that is
really resonating with corporate
counsel.”
Bloomberg BNA, April 24, 2015
“DLA Piper is reshaping how the
legal world views its brand.”
BTI Brand Elite 2015
“…DLA Piper is using innovation
to differentiate with clients.”
BTI Brand Elite 2015
“Over the past 15 years the firm
has charted an aggressive course
for growth that catapulted it to the
top of the heap both in terms of
revenue and lawyer headcount…”
The Wall Street Journal,
February 4, 2014
Game changer of the past 10 years (Financial Times 2015)
In global M&A and middle market deal volume (mergermarket and Thomson Reuters 2016)
Best in the world for Real Estate, Franchise, Entertainment and Pro Bono
(International Who’s Who 2015)
Best in Technology, Media and Telecoms (Legal 500 awards 2015)
Awards received for Pro Bono and
community engagement work in 2014
DLA Piper lawyer rankings
(Chambers and Partners 2015)
Best Diversity Initiative in an International Firm (Europe Women in Business Law Awards 2015)
Employer of Choice for Gender Equality (WGEA, Australian Government 2015)
Law Firm of the Year (Legal Business Awards 2014)
International Law Firm of the Americas for 5 consecutive years (International Tax Review 2014)
European Indirect Tax Team of the Year (International Tax Review 2015)
Corporate Venture Firm of the Year (Global Corporate Venturing magazine 2015)
Most powerful law firm brand in the world (Acritas 2015)
Law firm by revenue (Am Law Global 100 2015)
Most active private equity law firm in the US and globally by deal volume (Pitchbook 2014)
Law firm for global reach and breadth of international work (Law360 2015)
Best-Branded Law Firm (BTI Brand Elite 2016)
2
6
21 1,000
#
#
#
MORE

 DLA Piper is a pioneer in serving the
technology sector, having established a
presence in the heart of Silicon Valley over 40
years ago through its predecessor firm, Ware
and Freidenrich, which was formed in 1969, as
one of the original Silicon Valley law firms.
 As the Valley has grown, so has DLA Piper.
Today, we are located in more than 30
countries throughout Africa, the Americas, Asia
Pacific, Europe and the Middle East,
positioning us to help companies with their
legal needs around the world.
 We combine this global reach with our
decades-long commitment to serving
technology clients. The result is a legal partner
that empowers entrepreneurs and investors in
building their ideas into great global
companies.
Silicon Valley Pioneer

Global Footprint
Australia
Austria
Bahrain
Belgium
Brazil
Canada
China
Czech Republic
Finland
France
Georgia
Germany
Hungary
Italy
Japan
Kuwait
Luxembourg
Mexico
Morocco
Netherlands
New Zealand
Norway
Oman
Poland
Qatar
Romania
Russia
Saudi Arabia
Singapore
Slovak Republic
South Africa
South Korea
Spain
Sweden
Thailand
Ukraine
United Arab Emirates
United Kingdom
United States
Algeria
Angola
Bosnia-
Herzegovina
Botswana
Burundi
Colombia
Croatia
Denmark
Egypt
Ethiopia
Ghana
Indonesia
Ireland
Kenya
Mauritius
Mozambique
Namibia
Portugal
Rwanda
Tanzania
Turkey
Uganda
Venezuela
Zambia
RELATIONSHIP FIRMSDLA PIPER OFFICES

 Our Corporate and Securities practice consists of 250 lawyers
in the US, and nearly 600 worldwide, who are experienced at
representing clients pursuing sophisticated transactions.
 We advise clients on public and private equity and debt
securities offerings, mergers and acquisitions and
reorganizations.
 In addition to offering comprehensive transactional services,
the group’s lawyers advise clients on corporate governance,
IT, tax, compensation and technology issues.
 Our clients include public and private companies, ranging
from Fortune 500 companies to startup entities developing
industry leading technologies.
 We represent over 100 public companies as outside
corporate securities counsel. We also represent banks,
finance companies, venture capital and private equity funds,
insurance companies, pension funds and other institutional
lenders in acquisition financings, refinancings, ESOP loans,
recapitalizations, restructurings and other complex
transactions.
Corporate and Securities

 As your company grows and expands in established markets and
developing regions, our Mergers and Acquisitions practice group is
committed to being your partner for all your acquisition and
divestiture initiatives.
 Our approach is both strategic and entrepreneurial, drawing on the
combined experience of more than 180 lawyers in the United States,
and backed by a significant number of global M&A counterparts.
 We are highly responsive, multi-disciplined and creative problem
solvers dedicated to providing global advice and support, as well as
in-depth local knowledge. We work promptly, efficiently and
creatively to facilitate deals.
 We have built a platform that includes well-established and
comprehensive practice capabilities, industry experience in key
growth sectors, and access to global funding sources through our
strong relationships with the business and funding communities.
 From due diligence to post-merger integration, we deliver the
transactional resources to help your company prosper.
Mergers and Acquisitions
#1
GLOBAL
M&A
In 2015,
mergermarket ranked
us #1 globally in
overall M&A deal
volume for the sixth
consecutive year.

RECENT M&A RANKINGS
 Ranked #1 globally for announced deals for 6th
consecutive year (mergermarket, 2010-2015)
 Ranked #1 in mid-market deal volume globally
during 2015 (Thomson Reuters)
 Ranked #1 for European M&A deals
(mergermarket, 2013 and 2014)
 Ranked #1 for UK M&A deals for 8th
consecutive year (mergermarket, 2005-2015)
 Ranked #4 for US M&A deals (mergermarket,
2014 and 2015)
 Ranked #4 globally for announced and
completed deals (Thomson Reuters, 2014)
Mergers and Acquisitions
LEAGUE TABLE OF LEGAL
ADVISORS TO M&A BY DEAL COUNT
RANKING
FIRM NAME
DEAL
COUNT2015 2014
1 1 DLA Piper 441
2 3 Kirkland & Ellis 386
3 4 Jones Day 342
4 2 Latham & Watkins 336
5 9
Skadden Arps Slate
Meagher & Flom
298
6 5 Baker & McKenzie 292
7 7 White & Case 282
8 11 Allen & Overy 260
9 6 Clifford Chance 236
10 14 CMS 229

MERGERMARKET BLOOMBERG THOMSON REUTERS THOMSON REUTERS
DEAL COUNT
#1 Global
#1 Europe
#1 United Kingdom
#4 Americas
#4 Russia
#4 United States
#5 France
#6 Benelux
DEAL COUNT
#4 United States
Mid-Market (up to 500m &
250m)
#5 United States
Announced
#6 Global Mid-Market (up
to 500m & 250m)
DEAL COUNT
#1 Worldwide Mid-Market
#1 United Kingdom Involvement Mid-
Market and Small-Cap
#1 Worldwide Small-Cap
#2 Benelux Involvement Mid-Market and
Small-Cap
#2 Benelux Involvement Small-Cap
#2 European Involvement Mid-Market
and Small-Cap
#2 Worldwide M&A Completed
#3 US Target Small-Cap
#3 Worldwide M&A Announced
#4 Australia/New Zealand Involvement
Small-Cap
#5 Italian Involvement Mid-Market
#4 French Involvement Mid-Market
#4 Italian Involvement Small-Cap
#4 US Target Mid-Market
#5 Australia/New Zealand Involvement
Mid-Market
DEAL VALUE
#1 United Kingdom Involvement
Small-Cap
#2 European Involvement Small-
Cap
#2 Worldwide Small-Cap
#3 Benelux Involvement Small-
Cap
#3 United Kingdom Involvement
Mid-Market
#4 US Target Small-Cap
#5 Australia/New Zealand
Involvement Small-Cap
2015 League Tables

RECENT VC EXPERIENCE
 Named Law Firm of the Year in Corporate
Venture (Global Corporate Venturing, 2015)
 Since 2005, represented over 5,500 transactions
in the US – US$50 billion in value
 In 2015, completed 710 financings transactions
globally – 563 venture capital and 147 private
equity
 Ranked #4 Most Active Venture Capital Law
Firm in the US and globally in 2015, PitchBook
 Ranked #4 for early stage and #4 in late stage
completed VC deals US-based companies in
2015, PitchBook
 Ranked #4 Most Active Private Equity Law Firm
in the US and globally by deal volume in 2015,
PitchBook
Emerging Growth and
Venture Capital Practice
2015 GLOBAL VC & PE
LEAGUE TABLES
VENTURE CAPITAL RANK
Most Active Global 4th
Most Active US 4th
Most Active Early Stage 4th
Most Active Late Stage 4th
Most Active Software 4th
Most Active IT Hardware 2nd
PRIVATE EQUITY RANK
Most Active PE 4th
Most Active Buyouts 4th

 DLA Piper is one of the most widely recognized providers
of a full range of commercial, intellectual property law,
privacy, sourcing and technology law services for leading
businesses worldwide.
 Our lawyers provide both litigation-related (contentious)
and strategic commercial advice to a wide range of
industry sectors, helping clients from emerging technology
and pharmaceutical companies to established banks and
financial institutions achieve their objectives wherever they
do business.
 Our IPT practice encompasses nearly 500 dedicated
lawyers in more than 24 countries, with particular strength
in key global markets. Intellectual property and technology
law is at the core of any major business transaction or
strategic dispute and has become one of the most critical
legal areas as companies continue to expand and protect
their technologies, brands, products, data and services
around the globe.
Intellectual Property and Technology

 Our global technology transactions and strategic
sourcing lawyers have the market knowledge,
legal experience and global presence to provide
you with the highest quality legal services
throughout the world.
 Our practice concentrates on complex
transactions and multi-party, high-value project
work which frequently spans multiple
jurisdictions. We focus on the development,
protection, exploitation and use of intellectual
property and technology-related assets through
the stages of a company's growth, as well as the
sourcing of strategic assets and services for use
in a company's operations.
 Our team has deep industry experience in a
variety of sectors, allowing us to provide
practical advice and innovative solutions along
with market leading technical know-how.
Technology Transactions
and Strategic Sourcing E-Commerce
Cloud
Computing
LicensingIP Development
Procurement
Strategic
Alliances &
Joint Ventures
OutsourcingOpen Source
Telecoms
Technology
Transactions
Core Areas Include:

Companies operating in global markets face
complex employment challenges that require an
international perspective combined with a
knowledge of country-specific employment
practices. We advise a range of clients from local
startups to small multinationals to some of the
largest brands in the world on a range of complex
employment matters, including:
 Expansion strategies
 Employment set-up requirements
 Global expatriate mobility
 Works councils/unions
 Termination of employment
 Litigation
 Employment issues in M&A
and corporate reorganizations
Employment
Ranked in Band 1 for Global Employment
─Chambers Global 2010-2014

International Tax
With more than 300 tax lawyers and economists,
our global tax advisory services help multinational
companies address the complex challenges of
international commerce and business operations
as well as manage and resolve tax disputes. Our
global tax group assists clients in structuring a
wide range of transactions, from private equity
deals to corporate acquisitions and disposals. Our
services include:
 Transfer pricing
 Post-Acquisition Integration
 Cross-Border Licensing and IPT Management
 Tax Controversy
 VAT and Customs Duties
 Supply Chain and Distribution Network Restructuring
 Equity Investment and Incentives Tax Services

For more details and to register visit our website at
www.dlapipertechsummit.com
Please join us

DLA Piper is a global law firm operating through various separate and distinct legal entities. Attorney Advertising.
©2014 DLA Piper LLP (US)
Published by DLA Piper LLP (US)
Copyright © 2016 DLA Piper LLP (US)
All Rights Reserved
This bulletin is intended as a general overview and discussion of the subjects dealt with. It is not intended, and should not be used, as a substitute for taking legal advice
in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication. Pursuant to applicable Rules of
Professional Conduct, it may constitute advertising.

The Jungle - going global in 2016 from soup to nuts

Recommended

Recommended

More Related Content

What's hot

What's hot (11)

Similar to The Jungle - going global in 2016 from soup to nuts

Similar to The Jungle - going global in 2016 from soup to nuts (20)

More from Louis Lehot

More from Louis Lehot (16)

Recently uploaded

Recently uploaded (20)

The Jungle - going global in 2016 from soup to nuts