The M&A Process: Understanding the Lifecycle of a Deal & Basic Deal Documents (SERIES: PRIVATE COMPANY M&A BOOT CAMP)

Practical and entertaining education for attorneys,
accountants, business owners and
executives, and investors.
2

DISCLAIMER
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The material in this webinar is for informational purposes only.
It should not be considered legal, financial or other
professional advice. You should consult with an attorney or
other appropriate professional to determine what may be best
for your individual needs. While Financial Poise™ takes
reasonable steps to ensure that information it publishes is
accurate, Financial Poise™ makes no guaranty in this regard.

MEET THE FACULTY
4
MODERATOR:
Peter Feinberg Law Office of Peter Feinberg
PANELISTS:
Aarthi Belani Jones Day
Bob Dekker Insight Advisory Partners
David Lallouz Tannenbaum Helpern Syracuse & Hirschtritt LLP
Robert Londin Jaspan Schlesinger LLP

ABOUT THIS WEBINAR
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Buying, selling, or merging a company typically follows a similar set of steps from deal to deal. The
amount of time each step takes varies but the order of the steps is fairly uniform because the steps
follow a certain logic: before the parties share meaningful information, they should sign a
confidentiality agreement (a/k/a “non-disclosure agreement,” or “NDA”); once a baseline amount
of information is known by the would-be buyer, it commonly presents a letter of intent or term
sheet to the target or its owner, which serves as an outline for a deal but does not necessarily bind
the parties to consummate the transaction; additional due diligence and the negotiation, drafting
and signing of definitive documents comes next. The parties then obtain any needed regulatory
and/or contractual third party approvals; followed by closing; and finally by post-closing tasks. This
webinar will discusses all these steps from a macro perspective so that you can see the forest from
the trees, but does not do a deep dive into any one of them. Think of this webinar as a road map
or timeline for a typical deal.
This webinar is delivered in Plain English, understandable to you even if you do not have a
background in the subject. It brings you into an engaging, even sometimes humorous, conversation
designed to entertain as it teaches. And, it is specifically designed to be viewed as a stand-alone
webinar, meaning that you do not have to view the other webinars in the series to get a lot out of it.

ABOUT THIS SERIES
8
Corporate transactions (or “deals”) include many types of transactions. Viewed broadly, a deal can be a very small matter such as
drafting a purchase order, a non-compete agreement, or myriad other single purpose agreements necessary to document a legal
relationship between two parties and extend to large multi-national acquisitions and financings. One of the most significant types
of transactions a company can enter into, however, and the type that is commonly thought of as needing a “deal” lawyer, is a
Mergers and Acquisitions transaction.
M&A (mergers and acquisitions), viewed broadly, includes buying or selling all or part of a business, as well as other business
combinations, such as mergers. Such “deal” work commonly requires attorneys, accountants, intermediaries (i.e. investment
bankers) to work together.
This webinar series features leading M&A attorneys and other deal professionals speaking about private company M&A in
roughly chronological order, guiding the audience through a conversation that spans from deal origination, the LOI (letter-of-
intent) or term sheet, due diligence, document drafting and negotiation, closing, and post-closing. Issues addressed include tax
planning; corporate governance; closing conditions; representations and warranties; indemnification provisions; earn-outs;
restrictive covenants; antitrust; intellectual property; and employment. While many of the topics covered apply also to public
company M&A, the focus of this webinar series is on M&A involving a privately owned company.
As with every Financial Poise Webinar, each episode is delivered in Plain English understandable to investors, business owners,
and executives without much background in these areas, yet is also valuable to attorneys, accountants, and other seasoned
professionals. And, as with every Financial Poise Webinar, each episode brings you into engaging, sometimes humorous,
conversations designed to entertain as it teaches. Each episode in the series is designed to be viewed independently of the other
episodes, so that participants will enhance their knowledge of this area whether they attend one, some, or all episodes.

EPISODES IN THIS SERIES
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EPISODE #1 The M&A Process: Understanding the Lifecycle 1/18/2018
of a Deal & Basic Deal Documents
EPISODE #2 Structuring and Planning the M&A Transaction 2/15/2018
EPISODE #3 Key & Common Negotiated Provisions- Part 1 3/15/2018
EPISODE #4 Key & Common Negotiated Provisions- Part 2 4/19/2018
EPISODE #5 Post-Closing Issues- Integration & Potential Buyer/Seller Disputes 5/17/2018
Dates shown are premiere dates; all episodes will be available on
demand after their premiere date.

© 2018 by DailyDAC, LLC d/b/a Financial Poise Webinars ™
UNDERSTAND THE PROCESS
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Confidentiality Agreements
Letters of Intent and Term Sheets
Definitive Agreements
Due Diligence
Consents and Regulatory Approvals
Closing
Post-Closing Tasks

CONFIDENTIALITY AGREEMENTS
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• Arise in various contexts, including M&A, employment, sharing of IP, JVs and other business
relationships
• Protect sensitive information and transaction details from disclosure
• Prevent improper use of Information
Significance:
• Often viewed as “standard” or “boilerplate” but may have unintended consequences, restricting
Buyer’s activities in the industry and Buyer’s options as the negotiations progress, even if a transaction
never materializes
Mutuality: One-Way or Two-Way?
• Seller often “holds the pen” on CA, resulting in Buyer receiving proposed CA that is “one-way”
• Buyer often modifies CA to restrict Seller if Buyer will be disclosing information to Seller, and to
make other provisions “symmetrical”

DEFINITION OF
CONFIDENTIAL INFORMATION
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“Confidential Information” is usually defined broadly to include:
“any information concerning the Seller (whether prepared by the Seller, its Representatives or
otherwise and irrespective of the form, manner or nature of communication) which is furnished to
Buyer [before the date hereof,] now or in the future [by or on behalf of the Seller] … and any
notes, analyses, compilations, studies, interpretations or other documents prepared by Buyer to
the extent that they contain, reflect or are based upon, in whole or in part, the information
furnished to Buyer pursuant hereto.”

DEFINITION OF
CONFIDENTIAL INFORMATION (CONT’D)
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Buyers often include “to
the extent” language for
derivative materials to
prevent entire documents
from being tainted by a
single piece of Confidential
Information
Broad definition of
Confidential Information
makes it important to
focus on exclusions to
definition
Where trade secrets are
involved, consider nature
and extent of
confidentiality

COMPETITIVELY SENSITIVE
INFORMATION/ANTITRUST
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• Sensitivity about sharing pricing, marketing and other
competitive commercial information
• Antitrust laws and business implications
Transactions and
business relationships
involving competitors
pose special concerns
• Sellers may exclude sensitive information from
disclosure or defer disclosure until later in process
• Disclosure may be limited to advisors and/or select
individuals
• Disclosures may be limited to aggregated information
or otherwise masked
Varied approaches

EXCLUSIONS FROM
CONFIDENTIAL INFORMATION
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“Confidential Information shall not include:
(i) information that is or becomes generally available to the public [other than through the fault of the
receiving party] [other than through a breach of this Agreement];
(ii) information that was within Buyer’s possession prior to its being furnished to Buyer by or on behalf of the
Seller pursuant hereto or becomes available to Buyer from a source that was not [known by Buyer [after due
inquiry] to be] bound by an obligation of confidentiality [prohibiting disclosure of such information to Buyer]
[with respect to such information]; or
(iii) information that is independently developed by Buyer or its Representatives without the use of any
Confidential Information.”
Buyers seek to add the exclusions to definition
of “Confidential Information”

PERMITTED USES OF INFORMATION
AND USE RESTRICTIONS
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• “Will not disclose” vs. “Will keep confidential”
• Buyers generally seek to ensure that they may disclose information to their
Representatives
• Buyers may also seek to expand permitted uses of Confidential Information
beyond “evaluating” a potential Transaction, to include negotiating,
financing and consummating it
• Buyers tend to resist vague limits on use of Confidential Information:
ü Prohibitions on “detrimental” usage may expose Buyer to unknown
liabilities and restrictions (e.g., backdoor non-solicit or non-compete?)
“Buyer [will not disclose] [will keep confidential] the Confidential Information to any person and will not use the
Confidential Information either for any purpose other than to evaluate, [negotiate, finance and/or consummate] a
possible [negotiated] Transaction [or in any way detrimental to the Company]; [provided, however, that Buyer may
disclose Confidential Information to its Representatives ...].”
Sellers try to limit permitted uses of Confidential Information:

LETTERS OF INTENT & TERM SHEETS
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1. Purpose
• Establish a list of material terms to be agreed upon during the negotiation process
2. Process
• Draft term sheets go back and forth between parties
• Beware of offer and acceptance issues
• Balance needed:
üIf too detailed then moving straight to definitive agreements may be better
üAmbiguity of terms leads to later disputes with the document drafter taking “upper
hand”

RESPONSIBILITY FOR REPRESENTATIVES
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•“Buyer will [cause][direct] its
Representatives to observe the terms of
this agreement, and will be responsible
for any breach of this agreement by any of
its Representatives.”
Sellers seek to
make Buyers liable
for breaches by its
Representatives:
•Provide Representatives with a copy of the CA
and direct Representatives to comply with the
CA’s confidentiality provisions
•Have Representatives sign a “joinder” to provide
Seller with a direct remedy against
Representatives.
Variations

NON-SOLICITATION OF EMPLOYEES
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Sellers often seek to limit Buyer’s ability to solicit employees:
“Buyer agrees that, until the [third] anniversary of this Agreement, without the prior written consent of the
Seller, Buyer will not solicit to hire [or hire] any [officer or management-level] employee of the Seller [to whom
Buyer is [first] introduced in connection with the evaluation of a Transaction] ...”
• Non-Solicit vs. No-Hire
• When Seller is in same business/industry as Buyer, both parties are likely to have heightened sensitivity
• Term: Buyers generally seek to limit term of non-solicit to one year, depending on business needs
• Scope: Buyers may seek to limit scope of the non-solicit to minimize substantive restrictions and lessen the
administrative burden. Alternatives include:
ü Limiting scope to “officers or management-level” employees
ü Limiting scope to employees (first) introduced to Buyer in connection with evaluating Transaction

NON-SOLICIT CARVE-OUTS
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Buyers generally seek to further limit the scope of the non-solicit by including some
or all of the following exclusions:
provided, however, that the foregoing will not prohibit Buyer from:
(i) using solicitations not targeted at employees of the Seller, or employing any person who responds to such
solicitations;
(ii) using search firms, or hiring any persons solicited by such search firms, so long as such firms are not advised
by Buyer [after the date hereof] to solicit employees of Seller;
(iii) hiring, employing or discussing employment with any person who contacts Buyer independently without any
solicitation by Buyer; or
(iv) soliciting any person who has left the employment of the Seller prior to Buyer soliciting such person.”

ENFORCEMENT AND REMEDIES
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“It is further understood and agreed that money damages would not be a sufficient remedy for any
breach of this letter agreement and that [the Company] [both parties] shall be entitled to seek equitable
relief, including, without limitation, injunction and specific performance, as a remedy for any such
breach.
Such remedies shall not be deemed to be the exclusive remedies for a breach of this letter agreement
but shall be in addition to all other remedies available at law or equity to the non-breaching party.”
Equitable relief is key

KEY BINDING PROVISIONS OF
LETTERS OF INTENT
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• Exclusivity/Standstill/No Shop
ü Restricts Seller frim engaging in negotiations with any other party for a specified
period
ü Buyer’s consideration is money spent on investigating potential transaction
ü Usually 30-90 days in length
ü May require Seller to report any other offers or even contact from interested
parties
• Breakup Fee
ü Obligates the Seller (very rarely applies to Buyers) to pay Buyer a specified
amount, usually 1-5% of value of transaction, if Seller doesn’t close transaction
ü Very limited outs for Seller
ü Relatively rare and very disadvantageous to Seller, as it will limit Seller’s flexibility

DEFINITIVE AGREEMENTS
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• Provide the governing terms for the transaction and supersede the letter of intent
• Primary document is either a stock or asset purchase agreement or merger
agreement
• Typically drafted by Buyer’s counsel and includes how liabilities will be handled,
purchase price paid, covenants, and closing conditions, among other matters
• Usually begun immediately after signing of the letter of intent

KEY PROVISIONS OF ALL
DEFINITIVE AGREEMENTS
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• Purchase Price (Amount; Mix of Cash, Stock and Note; Any Escrow Provisions)
• Representations and Warranties (What the Seller is telling the buyer about itself,
and to a lesser extent, the Buyer is telling the Seller)
• Indemnifications (Consequences for breaches of representations and warranties,
among other things)
• Closing Conditions (What each party must do for the transaction to be completed).

DUE DILIGENCE: DEFINITION
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• “Due Diligence” generally refers to the investigation, examination
and verification by a multidisciplinary team of the material factual
and legal circumstances of target
• “By conducting due diligence, Buyer seeks review information
sufficient to enable it to make informed decision on whether to
proceed

GOALS OF DUE DILIGENCE
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Evaluate and quantify legal and business risks.
Determine purchase price.
Spot timing issues and deal breakers.
Identify other important issues.
Assist in structuring transaction and drafting documents.

PREPARATION
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•Form - tailor to transaction
•Deal or industry specific
•Allow for follow-up questions
Diligence
Request List
•Background research
•Understand purpose of review
•Line up specialists
Prepare

PREPARATION
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• Learn about transaction & parties:
ü Confidential Informational Memorandum
ü Search Internet and Public Files
ü Search LEXIS/WESTLAW for lawsuits involving the Target
ü Review SEC filings (if Target is a public company):
§ Form 10-K (Annual)
§ Form 10-Q (Quarterly)
§ Proxy Statement (March)
§ Form 8-K (Amendments)
§ Press Releases
§ Prospectuses

THE DATA ROOM
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The Seller or Target
generally collects and
organizes the documents
which Buyer wishes to
review and houses such
documents in a “data
room.”
Data room can be a
physical room in which
hard copies of relevant
documents are made
available.
A virtual data room is a
secure website which
prospective purchasers can
access to review relevant
documents in an electronic
format.

DOCUMENT REVIEW
28
Before you begin actual document review:
• Know how each type of document relates to transaction
• Understand timing constraints
• Clarify scope of review (i.e., materiality thresholds)
• Categorize the documents:
ü Employment Agreements
ü Real Property Agreements
ü Loan Agreements
ü Merger Agreements
ü Asset Purchase Agreements
ü Distributorship / Sales Agent Agreements
ü Customer Agreements

DISCLOSURE SCHEDULES
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• Reflective of seller’s operations and due diligence
• Describe key aspects of seller’s business
ü i.e. key customers and suppliers
• Allocation of risk of loss for events which occur after closing date related to
events which occurred before closing date

DOCUMENT REVIEW:
GENERAL CONTRACT CONCEPTS
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Purpose: Parties, relationships, substance of agreement (i.e., goods, services, etc.)
Economics: Review payments
Term: Term, renewal terms
Change of Control: Describe provisions
Termination: Early termination provisions
Assignment: Assignment and transfer provisions
Continuing Obligations (Covenants): i.e., product warranties
Acceleration of Rights: Any rights triggered?
Governing Law: Which state?

THE DUE DILIGENCE MEMORANDUM
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• Format: Use proper format – many law firms have a standardized format
• Executive Summary:
üScope of review and limitations
üSummarize transaction
üSummarize open issues
• Main Body:
üAvoid legalese
üRecognize audience
üUse charts
üFollow outline or index
üSimplify drafting

CONSENTS AND REGULATORY APPROVALS
32
• Many transactions sign and close (see following slides) at the same time; these are
known as “One Step Transactions”
• In others, though, the parties sign the primary definitive agreement, then wait to
sign the other agreements and exchange the purchase price until a specified action
or actions occur
• These actions may include the Buyer obtaining financing, the Seller obtaining third
party consents (particularly in an asset purchase) and/or the transaction receiving
regulatory approval
• Consents may be required from, among others, vendors, customers or Seller’s
landlord
• Regulatory approval may be required based on transaction size, market share,
sensitivity of the nature of the business being sold, etc.

CLOSING CHECKLIST ITEMS
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• Closing conditions from acquisition agreement
• Closing deliveries by each party
ü i.e. employment agreements; non-compete agreements
• Share/asset transfer mechanics or certificate of merger
• Consents/approvals of regulatory bodies
• Third party consents (cross check disclosure schedules)
• Corporate approvals (board, stockholder)
• Lien releases
• Funds flow memorandum
• Target officer/director resignations
• Press releases

ANCILLARY CLOSING DOCUMENTS
34
Escrow agreement
Opinions
Side letters
Closing balance sheet (for purchase price adjustments)
Bring-down certificates and Secretary’s certificate
Good standing / tax clearance certificates

PROPOSED TRANSACTIONS
WHICH DO NOT CLOSE
35
• General rule: parties go back to the pre-transaction status quo, with each
bearing its own costs
• But if a purchase agreement has been signed, it could grant, or otherwise
implicitly give, a party an equitable right to close the transaction or a legal right
to money damages
• And some purchase agreements and/or letters of intent provide for a breakup
fee, which requires the seller(s) to pay the buyer (it is occasionally reciprocal,
but usually not) a specified amount if the transaction does not close for some
reason due to seller’s actions or lack thereof

THE CLOSING
36
• Buyer gives seller the purchase price via wire(s), check(s), promissory notes, and/or
stock- or any combination thereof
• Both parties sign transaction documents and make closing deliveries
• Commonly “electronic” today

POST CLOSING TASKS
37
• Net Working Capital Adjustments
ü Purchase Price is often adjusted after closing for difference between expected or
target net working capital number at closing and actual net working capital
number at closing
• Purchase Agreement Obligations
ü Net Working Capital Adjustments
ü Earnout
ü Indemnification Claims
ü Post-Closing Covenants
ü Required Filings and Notices
• Other Post Closing Arrangements
ü Transition Agreements
ü Employee/Consulting Agreement
ü Escrow Agreements

ABOUT THE FACULTY
38
PETER FEINBERG
peterdfeinbergesq@gmail.com
Peter Feinberg has more than 25 years’ experience representing primarily middle market companies
in all aspects and many sectors of merger and acquisition transactions. Mr. Feinberg has successfully
closed well over 150 merger and acquisition transactions, representing buyers and sellers, public and
privately held companies, multinational firms, family owned businesses and private equity
firms. He has previously been a partner at Thelen Reid & Priest and Ferrari Ottoboni, and of
counsel at Hoge Fenton Jones & Appel, and has worked in house at NetApp and Clorox. He
currently works as solo practitioner and on an independent and project basis in San Francisco and
Silicon Valley.

ABOUT THE FACULTY
39
AARTHI BELANI
abelani@jonesday.com
Aarthi Belani is an attorney at Jones Day in Silicon Valley. She focuses on M&A, joint ventures, and social enterprise
and impact investment.
Prior to joining Jones Day, Aarthi was on the in-house legal team covering strategy and corporate development at
Credit Suisse in New York, where she worked on proprietary deals, M&A, strategic alliances (including revenue-
sharing), spin-outs and divestitures, joint ventures governance, and asset management finance. She also advised on U.S.
legal, regulatory, and compliance matters such as the Volcker Rule and the Advisers Act. In addition, Aarthi was a
member of the Sustainability Network, a Credit Suisse OneBank (cross-divisional) initiative to develop impact
investment products, and served as a compliance officer for asset management alternative investments businesses,
including venture capital, private equity funds and funds-of-funds, and asset management joint ventures in emerging
markets, frontier markets, and infrastructure.
At the start of her career, Aarthi was an associate in the New York office of an international law firm for five years,
where she was involved in numerous complex transactions. She is a director of Bidoun, a not-for-profit publishing,
curatorial, and educational initiative that prints a quarterly magazine showcasing art and culture from the Middle East.

ABOUT THE FACULTY
40
BOB DEKKER
bdekker@insightadvisorypartners.com
Bob is a career capital markets professional and entrepreneur with extensive experience working with companies
ranging from emerging growth to large, publicly traded enterprises. Bob has been an advisor to a wide assortment of
public and private companies in the food and consumer products industries including independent and franchise
restaurants, food retailers and food packaging companies. As a senior banker with ABN AMRO, Inc. and Prescott,
Ball & Turben, Inc. (an affiliate of Kemper Insurance
Company) he arranged over $2 billion of private market transactions during his investment banking career. Bob is a
member of the Association for Corporate Growth where he co-chairs the committee responsible for hosting ACG’s
Annual Food Conference. For the past four years, Bob has served as a Super Mentor to several emerging growth
food companies that have been accepted into the Good Food Business Accelerator (part of the 1871 incubator)
mentoring program, and he also serves as a member of its Steering Committee. Bob holds a BA in Economics from
Denison University. He is a FINRA Registered Representative of StillPoint Capital, LLC and holds the Series 62,
63 and 79 registrations.

ABOUT THE FACULTY
41
DAVID LALLOUZ
lallouz@thsh.com
David R. Lallouz is a Partner at Tannenbaum Helpern in New York. As part of the Corporate, Capital
Formation and Securities Law practice, he advises clients on complex corporate transactions. For a decade
and a half, David has helped clients creatively structure, negotiate and implement mergers and acquisitions,
private equity transactions, venture capital investments and joint ventures.
David has successfully negotiated over a hundred M&A and related transactions to date, on the buy-side and
sell side, and across a wide range of industries, including, industrial, manufacturing, commercial and retail,
banking and financial services, biotech and health sciences, staffing, advertising and talent management, to
name a few.
In addition, he regularly advises and counsels clients on corporate governance, business formation and
capitalization, as well as commercial and contractual relationships. David is a co-founder of Tannenbaum
Helpern’s StartMeUp program for entrepreneurs, offering a suite of legal services tailored to the needs of new
business owners.

ABOUT THE FACULTY
42
ROBERT LONDIN
rlondin@jaspanllp.com
Robert Londin is a Partner at Jaspan Schlesinger LLP in Garden City, NY. As a passionate, commercial
advocate Robert counsels numerous companies in connection with their mergers and acquisitions (both
strategic and financial), financing needs and the execution of their business plans; large investment funds in
their portfolio company investments; lenders and borrowers in secured and mezzanine/subordinated debt
deals; financial concerns in capital markets transactions; emerging growth and technology companies; seed
capital and venture capital clients in connection with the formation of their investment vehicles and with
portfolio company investments; and companies and highly compensated executives in executive
compensation and separation arrangements.
Robert serves as general counsel to many clients and advisory boards including the resolution of day-to-day
legal issues and strategic planning and business development. Robert represents technology and emerging
growth clients in connection with all facets of their business plans.

IMPORTANT NOTES
43
The material in this presentation is for general educational
purposes only.
It has been prepared primarily for attorneys and accountants
for use in the pursuit of their continuing legal education and
continuing professional education.

QUESTIONS OR COMMENTS?
44
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DailyDAC LLC, d/b/a Financial Poise™ provides continuing education to
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