An in-depth examination of the top mistakes made during an acquisition. The overview will include mistakes involving issues with governing instruments, securities matters, current indebtedness, contracts, legal proceedings and compliance, employee or labor matters, customers or suppliers, financial and tax matters, real estate, products and services and intellectual property rights and agreements.

1. Phone: (504) 568-1990 Address:
Fax: (504) 310-9195 601 Poydras Street, Suite 2775
Website: www.lawla.com New Orleans, LA 70130
Top Mistakes Made During an
Acquisition - And How to Avoid Them!
Presented by:
Stewart Peck and Benjamin Kadden
Partners
Lugenbuhl, Wheaton, Peck, Rankin & Hubbard
Buying and Selling a Business: Start to Finish
New Orleans, LA, December 9, 2016

2. Make a List and Check it Twice
Avoid mistakes by maintaining an active due diligence checklist so you
don’t make mistakes involving the following issues:
• Governing Instruments
• Securities Matters
• Current Indebtedness
• Contracts
• Legal Proceedings and Compliance
• Employee/Labor Matters
• Customers/Suppliers
• Financial and Tax Matters
• Real Estate
• Products and Services
• Intellectual Property Rights and Agreements

3. Governing Instruments
Mistake: Target company isn’t qualified to do business in Texas.
How to Avoid: Remember to obtain all governing instruments, even a
list or copies of certificates evidencing the states and countries where
the target company is authorized and qualified to do business. Also
remember certificates of incorporation and bylaws, minutes, consents,
records of stock issuances, and even business plans.

4. Securities Matters
Mistake: An SEC notification that target company didn’t file
registration to sell securities.
How to Avoid: Obtain all security documents from target company
during acquisition period, including all permits or other securities law
filings for transfer of securities or forms filed to qualify for exemptions,
including all correspondence and memoranda related to the filings.
Also remember all schedules setting forth issuances of stock,
schedules of current record owners of shares of stock, stock options,
agreements relating to purchase or sale of securities, any legal
opinions given in connection with sale of securities.

5. Current Indebtedness
Mistake: Receipt of notification of lien enforcement action.
How to Avoid: Obtain a schedule of all liens and encumbrances
against the Company’s assets or stock, check all public records for
outstanding liens, obtain any agreements confirming available or
outstanding lines of credit, obtain a schedule summarizing short-term
and long-term debt and obligations of the target company, obtain all
agreements securing or relating to outstanding indebtedness of the
target company or anyone who the company may serve as guarantor
for.

6. Contracts
Mistake: Third party didn’t consent to assignment of contract and now
won’t provide it.
How to Avoid: obtain all material contracts to which the target
company is a party and determine whether they can be assigned by
buyer, whether third party consent is required, whether there are
provisions for change or ownership or control, and whether there are
any other limitations in extending those contracts once the target
company is acquired.

7. Legal Proceedings and Compliance
Mistake: Service of a lawsuit and stack of discovery requests.
How to Avoid: Obtain a list of all legal, arbitration, or administrative
proceedings or investigations to which the target company is or was a
party with all of the related details including pleadings, names of
parties and law firms involved, judgments, settlements,
correspondence, and any related documentation. Search the public
records for any past or present litigation involving the target company
or directors of the company. Also obtain all documentation of
compliance with all applicable regulations and laws.

8. Employee/Labor Matters
Mistake: The end company now has 20 people doing the same job.
How to Avoid: Obtain a list of all employees, including job title,
location, hire date, and base salary in order to make a plan to merge
two existing companies with two groups of employees. Obtain a
schedule of compensation paid to officers, directors, and key
employees including salary, benefits, bonuses, noncash
compensation, and all collective bargaining contracts with any
organizations representing employees of the Company. Implement a
transition team to integrate the two groups of employees and avoid
duplication.

9. Customers/Suppliers
Mistake: There’s now a conflict between an old customer and a new
customer who came with the target company.
How to Avoid: Obtain a schedule of current customers, clients, and
suppliers by geography, type of customer, annual revenues, and
length of relationship. Review and run conflict checks within the
acquiring company to confirm no conflicts or to implement plan to
avoid potential conflicts.

10. Financial and Tax Matters
Mistake: IRS sends an audit notice and there is no documentation to
provide.
How to Avoid: Obtain all accountants’ reports, all financial statements,
all documentation from the target company’s accountants regarding
control systems, methods of accounting, or other financial issues.
Obtain all federal and state tax returns for the last three years, all
payroll registers, and any other tax information as applicable.

11. Real Estate
Mistake: Lease for office building expires and doesn’t have renewal
option.
How to Avoid: obtain all deeds, leases, and subleases of property and
analyze whether they can be assigned to purchasing company,
whether certain requirements must be met if target company is
acquired in order to maintain leases or other property rights, and
implement plan to meet any necessary requirements. If the sale of
immovable property/real estate is part of acquisition make sure all
documents are in place to transfer the property, including all ancillary
documents such as resolutions, tax information, title policies, and
other insurance.

12. Products and Services
Mistake: Notice of product liability suit arrives in the mail.
How to Avoid: obtain a description of all products created,
manufactured, licensed, sold, or distributed by target company, and all
warranty agreements relating to the products.

13. Intellectual Property Rights and Agreements
Mistake: Receive a cease and desist letter for infringing on a
copyright.
How to Avoid: obtain a schedule of all US and foreign copy right
registrations and applications, all licenses granted by the Company
relating to copyrights, any copyrighted work not owned by the
Company but which it is licensed to use; obtain a list of all
trademarks/service marks registrations and applications, unregistered
trademarks used by the company, and all tradenames used by the
company; identify all patented technology or other products owned or
used by the Company and all related ownership and license
documents, identify any patent of a third party of which the company
knows may be or become the subject of a patent infringement claim
by the holder of the patent with respect to the company’s products or
services.

14. Benjamin W. Kadden is a Shareholder in the New Orleans
office of Lugenbuhl, Wheaton, Peck, Rankin & Hubbard. Mr.
Kadden’s practice focuses upon Bankruptcy, Restructuring, &
Creditors’ Rights, Corporate & Commercial Law, Mergers &
Acquisitions, and Commercial Litigation. In connection with
his restructuring practice, Mr. Kadden has experience acting
as lead Debtor’s counsel, counsel for official committees of
unsecured creditors and as counsel for secured lenders. Mr.
Kadden has also actively participated in a number of merger &
acquisition transactions pertaining to numerous businesses
based in the Gulf Coast, with a focus upon representation of
non-public buyers and sellers in equity and asset
sales. Because of his experience in complex Chapter 11
bankruptcy cases, Ben has direct experience and knowledge
regarding the purchase or sale of assets by distressed
companies, including navigating the process while a buyer or
seller is in bankruptcy.
Ben has earned an AV Preeminent Rating by Martindale-
Hubbell, and been recognized as a Super Lawyers Rising Star
(2014-2016) and Top Lawyer by New Orleans Magazine in
Insolvency and Reorganization Law (2014 & 2015).
Stewart F. Peck is a Senior Managing Partner and
founding member of Lugenbuhl, Wheaton, Peck, Rankin &
Hubbard, with offices in Houston, Texas, New Orleans and
Baton Rouge, Louisiana. With 39 years of experience in
multiple legal areas, Mr. Peck has handled over 70
reported cases. He has handled significant, complex
financing and merger and acquisition transactions and
Chapter 11 proceedings. He has been involved with the
purchase and sale of numerous businesses. Mr. Peck
graduated from Tulane Law School in 1977 where he was
elected to the Order of the Coif and was a member of the
Tulane Law Review. Mr. Peck graduated with distinction
from Kenyon College, Magna Cum Laude, in 1974, where
he was a member of Phi Beta Kappa.
Recognized for many accomplishments, Mr. Peck is listed
in Chambers USA, Best Lawyers in America, Best Lawyers
in New Orleans, and Louisiana Super Lawyers. He was
recently named to the 2016 class of New Orleans
CityBusiness Leadership in Law.
This presentation authorship was in
partnership with Lugenbuhl Associate Ms.
Leslie-Johns Ray.

15. Top Mistakes Made During an Acquisition - And
How to Avoid Them!
Stewart Peck and Benjamin Kadden
Partners
Lugenbuhl, Wheaton, Peck, Rankin & Hubbard
601 Poydras Street
Suite 2775
New Orleans, LA 70130
Phone: (504) 568-1990 Fax: (504) 310-9195
Website: www.lawla.com
New Orleans • Houston • Baton Rouge