Category Archives: Jonathan Hodes

Stubbs Alderton & Markiles, LLP Presents: “How to Successfully Position Your Company to be Sold” – September 22

Join Stubbs Alderton & Markiles, LLP

for this exclusive event!

 

merger-ahead

“How to Successfully Position

Your Company to be Sold”

 

Thursday, September 22, 2016

 5:30pm-8:00pm

 **Food, Drinks & Networking Included!**

Stubbs Alderton & Markiles, LLP
1453 3rd Street Promenade, Suite 300
Santa Monica, CA 90401

Parking

4th Street/Broadway ramp or in the Santa Monica Place Mall

 Register!

Featuring

Moderator:

Jonathan R. Hodes, Partner, Stubbs Alderton & Markiles, LLP

Jonathan_Hodes_cropJonathan R. Hodes is a partner of the Firm, and co-chair of the Mergers and Acquisitions Practice Group. Jonathan concentrates in the area of domestic and international business structures and operations with an emphasis on corporate law, securities, and general business law, including international cross-border transactions.  He devotes substantial time to buy side and sell side mergers and acquisitions, management buy-outs, leveraged buy-outs, leveraged recaps, mezzanine and senior debt financing transactions, work-outs and secured lending and leasing transactions.

Panelists:

David Herman, Managing Partner, Diamond Capital Advisors

davidhermanDavid Herman is a founder and Co-Managing Partner of Diamond Capital Advisors. In 2009, David co-founded Diamond Capital. Due to his operational and transactional experience, David understands the value-drivers that attract buyers.  This enables him to generate better than market evaluations for his clients. Owning and selling two businesses provides David with the insight to effectively advise his clients during one of the most challenging times in a business owner’s career. David is licensed (series 7, 79, 63) by FINRA as a General Securities Representative.

Jennifer Sargent, CEO & Co-Founder, Hitfix 

jennifersargentJen is the CEO and Co-Founder of HitFix, the fastest growing entertainment news brand in the U.S. Prior to HitFix, Jen cultivated an expansive range of digital expertise covering the media and technology landscape, including leadership roles at Reed Business Information (parent company of Variety), DoubleClick, BV Capital and J.P. Morgan Technology & Media investment banking. Jen has an MBA from Harvard Business School and a BS in Electrical Engineering from UVa. She is a frequent mentor to aspiring entrepreneurs and has been featured in publications such as USA TodayThe New York Observer, and SoCalTech.com, among others.

Scott Galer, Partner, Stubbs Alderton, & Markiles, LLP

Scott_Galer_cropScott Galer is a partner at Stubbs Alderton & Markiles, LLP and co-chairs the firm’s Mergers and Acquisition Practice Group. Scott’s practice focuses on counseling private and public middle-market and emerging growth companies in areas of mergers and acquisitions, securities offerings, joint ventures, complex brand and technology licensing and other strategic business arrangements. In addition, Scott has expertise in advising emerging growth companies from formation through their various stages of growth, including formation, seed and venture capital financing, complex operating and stockholder agreements, employment contracts and equity incentive arrangements.

Eli Eisenberg, Founder & CEO, Straight Line Management

eli1.jpgEli Eisenberg has over 25 years of hands on experience in the financial and business management of entrepreneurial companies. As founder and CEO of Straight Line Management™ Eli specialize in providing financial expertise and mentoring to high-potential early stage companies. He helps them to increase profitability, secure funding, evaluate and capitalize on opportunities, streamline financial operations, and get the financial side of the business under control. I have extensive experience in strategic planning, capital raising strategies, financial management and forecasting, business plan preparation, and development and streamlining of management reporting systems and controls.

 

 

Special Thanks to our Sponsors! 

 

SAM High Res Logo 1Stubbs Alderton & Markiles, LLP is a business law firm with robust corporate, public securities, mergers and acquisitions, entertainment, intellectual property, brand protection and business litigation practice groups focusing on the representation of, among others, venture backed emerging growth companies, middle market public companies, large technology companies, entertainment and digital media companies, investors, venture capital funds, investment bankers and underwriters. The firm’s clients represent the full spectrum of Southern California business with a concentration in the technology, entertainment, videogame, apparel and medical device sectors. Our mission is to provide technically excellent legal services in a consistent, highly-responsive and service-oriented manner with an entrepreneurial and practical business perspective. These principles are the hallmarks of our Firm. www.stubbsalderton.com

diamondcapitaladvisorsDiamond Capital Advisors is a team of experienced professionals, all former business owners who have successfully run and then sold their own businesses, who are now dedicated to achieving the highest possible value for our clients. We increase personal and corporate wealth through mergers, acquisitions, and raising capital at the most favorable terms possible. We act as your bridge, translating the words and process of the capital markets to that of normal, everyday business language. We manage the entire transaction process so you don’t have to worry about it.  We drive value by implementing a transactional approach that includes sophisticated pre-planning focusing upon the clients’ needs and concerns, coupled with an aggressive and disciplined blind auction process. www.diamondcapadvisors.com

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Ready for the Market – How to Successfully Position Your Company to be Sold

MERGER SIGN BELOW OFFICE BUILDINGNow is a great time for entrepreneurs to sell their companies. However, even in good times investment bankers will tell a seller that the company must be positioned for sale to be successful.

What needs to be prepared to position a company for sale?
The seller must have his or her company financials in good order. This usually means reviewed financials at a minimum. Most sophisticated buyers, like a private equity fund for example, will require audited financials as part of their internal investment criteria. They may also perform a quality of earnings report to detect any flaws in your accounting system or non compliance with GAAP.

You must have your corporate records and minute book in order. This includes your organizational documents, director and shareholder actions, stock register and other customary items. These items should be complete, signed and in the minutes book.

Make sure your contracts are signed, in writing (where applicable), and in one place with all amendments. This will help to expedite the buyer’s due diligence review and reflect favorably on your management skills.

You should also have offer letters or employment agreements, assignments of inventions and nondisclosure agreements in place for key employees, particularly if your business is dependent on key technology and personnel. If you have an HR function, you should have employment policies in place.

Determine the impact on employees if information about a possible sale leaks out to the work force. If that is an issue, handle all due diligence off site or online through a secure website (a data room) and limit the buyer’s access to personnel until the latest possible time.

What legal issues might come up in the sale process?
There are obviously many legal issues that will come up, but here are just a few.

If you have been sued or are about to be, you should have your litigation counsel prepared to explain the status of the cases, the likely cost you may incur if you lose (or even if you don’t lose but have big attorneys fees), the effect on the company’s business, etc. This will surely come up in the buyer’s due diligence. There will likely be an escrowed amount from the sale proceeds to handle the cost of the litigation so as to shift some or all of the risk to the seller.

If you are in a regulated business, make sure you are in compliance with applicable rules and that your counsel can confirm this. The buyer likely will require a legal opinion from counsel to address this and other customary legal issues.

If you are in a technology business, be thinking about how you have protected your intellectual property, including trade secrets, and whether there are any infringement issues. This will be heavily negotiated in the purchase agreement.

How can companies stay on top of contractual matters?
Securing landlord or third-party contract approvals to a sale often takes weeks or longer to secure. If this is going to be an issue in your company, plan ahead and start the process as early as possible — recognizing that the deal may fall apart, so don’t jump the gun too soon.

Check all contracts for change of control provisions to ensure compliance with those provisions.

Start the process early with your lawyer to go over representations and warranties that are likely to be included in a purchase agreement. You will need to be thinking about scheduling exceptions to representations, insurance coverage, environmental matters, undisclosed liabilities, and numerous other matters that will be the subject of representations and covenants in the purchase agreement.

Start thinking about the letter of intent. Will it be binding or nonbinding? Will it go into extensive detail so you know upfront whether you will be able to resolve all material business points at the letter of intent stage? Will there be an earn-out? Will there be a financing contingency? Will you have to provide seller financing? How will the deal be structured? Will there be a standstill period?

Who should be involved in the process and what should be communicated to them?
Locate and engage suitable M&A counsel, accountants (if you do not already have one) and an investment banker to assist in the sale. If your golf buddy is your lawyer, chances are he may not be up to the task of doing an M&A deal. You will need a lawyer that specializes in M&A because it is complicated and part of the negotiations revolve around what are ‘market’ terms in the current environment.
There is often tax structuring necessary to secure a tax efficient sale, so engage tax experts early in the process. The M&A law firm you use will likely have this expertise.

Discuss with your investment banker (if you plan to use one) what they believe is the current market valuation for a company such as yours in today’s market so your expectations are met when the company is marketed. There are investment bankers who handle middle market as well as larger, or smaller, deals. M&A counsel can help you select a banker for your deal.

Even though you think you know all the buyers in your market niche, investment bankers have big rolodexes and have contacts with strategic as well as financial and foreign buyers. Although the investment banker will charge a fee, you can often get a significantly higher price using an investment banker. This is not essential but certainly something to consider carefully.

______________________________________________

Jonathan_Hodes_crop

Jonathan R. Hodes is a partner of the Firm, and co-chair of the Mergers and Acquisitions Practice Group.  Jonathan concentrates in the area of domestic and international business structures and operations with an emphasis on corporate law, securities, and general business law, including international cross-border transactions.  He devotes substantial time to buy side and sell side mergers and acquisitions, management buy-outs, leveraged buy-outs, leveraged recaps, mezzanine and senior debt financing transactions, work-outs and secured lending and leasing transactions.

Jonathan’s experience includes a broad range of corporate work including complex public and private, domestic and international mergers and acquisitions with emphasis on middle market companies, purchases and sales of middle market companies, representation of emerging growth companies from inception through various tiers of venture capital financing and IPO’s and corporate finance transactions. He also works on private equity deals with emphasis on add on portfolio acquisitions to existing platforms, and dispositions of portfolio companies.

Jonathan’s practice also includes corporate, partnership and limited liability company formation and ongoing representation; as well as securities offerings including public, private, Rule 144A, and international Regulation S offerings as well as securities compliance matters. He has a broad range of industry experience in many industries, including biologics, money service business, television production and distribution, real estate developers, construction management, technology companies, hotel owners and operators, video game publishers, and the manufacturing sector.

For more information regarding our Mergers & Acquisitions Practice Group, please contact Jonathan Hodes at jhodes@stubbsalderton.com or (818) 444-4508.

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Ready for the Market – How to Successfully Position Your Company to be Sold

Jonathan Hodes, co-chair of the Mergers & Acquisitions Practice Group at Stubbs Alderton & Markiles, LLP discusses what it takes to position a company for sale.

____________________________

In times of recession there is pent-up demand by entrepreneurs to sell their companies. Even in good times investment bankers will tell a seller that the company must be positioned for sale to be successful.

Because of the relative unavailability — or high cost — of outside funding for business acquisitions, your company needs to be positioned for sale now more than ever.

What needs to be prepared to position a company for sale?
The seller must have his or her company financials in good order. This usually means reviewed financials at a minimum. Most sophisticated buyers, like a private equity fund for example, will require audited financials as part of their internal investment criteria.

You must have your corporate records and minute book in order. This includes your organizational documents, director and shareholder actions, stock register and other customary items. These items should be complete, signed and in the minutes book.
Make sure your contracts are signed, in writing (where applicable), and in one place with all amendments. This will help to expedite the buyer’s due diligence review and reflect favorably on your management skills.

You should also have offer letters or employment agreements, assignments of inventions and nondisclosure agreements in place for key employees, particularly if your business is dependent on key technology and personnel. If you have an HR function, you should have employee policies in place.

Determine the impact on employees if information about a possible sale leaks out to the work force. If that is an issue, handle all due diligence off site or online through a secure Web site and limit the buyer’s access to personnel until the latest possible time.

What legal issues might come up in the sale process?
There are obviously many legal issues that will come up, but here are just a few.
If you have been sued or are about to be, you should have your litigation counsel prepared to explain the status of the cases, the likely cost you may incur if you lose (or even if you don’t lose but have big attorneys fees), the effect on the company’s business, etc. This will surely come up in the buyer’s due diligence. There will likely be an escrowed amount from the sale proceeds to handle the cost of the litigation so as to shift some or all of the risk to the seller.

If you are in a regulated business, make sure you are in compliance with applicable rules and that your counsel can confirm this. The buyer likely will require a legal opinion from counsel to address this and other customary legal issues.

If you are in a technology business, be thinking about how you have protected your intellectual property, including trade secrets, and whether there are any infringement issues. This will be heavily negotiated in the purchase agreement.

How can companies stay on top of contractual matters?
Securing landlord or third-party contract approvals to a sale often takes weeks or longer to secure. If this is going to be an issue in your company, plan ahead and start the process as early as possible — recognizing that the deal may fall apart, so don’t jump the gun too soon.

Check all contracts for change of control provisions to ensure compliance with those provisions.

Start the process early with your lawyer to go over representations and warranties that are likely to be included in a purchase agreement. You will need to be thinking about scheduling exceptions to representations, insurance coverage, environmental matters, undisclosed liabilities, and numerous other matters that will be the subject of representations and covenants in the purchase agreement.

Start thinking about the letter of intent. Will it be binding or nonbinding? Will it go into extensive detail so you know upfront whether you will be able to resolve all material business points at the letter of intent stage? Will there be an earn-out? Will there be a financing contingency? Will you have to provide seller financing? How will the deal be structured? Will there be a standstill period?

Who should be involved in the process and what should be communicated to them?
Locate and engage suitable M&A counsel, accountants (if you do not already have one) and an investment banker to assist in the sale. If your golf buddy is your lawyer, chances are he may not be up to the task of doing an M&A deal. You will need a lawyer that specializes in M&A because it is complicated and part of the negotiations revolve around what are ‘market’ terms in the current environment.
There is often tax structuring necessary to secure a tax efficient sale, so engage tax experts early in the process. The M&A law firm you use will likely have this expertise.

Discuss with your investment banker (if you plan to use one) what they believe is the current market valuation for a company such as yours in today’s market so your expectations are met when the company is marketed. There are investment bankers who handle middle market as well as larger, or smaller, deals. M&A counsel can help you select a banker for your deal.

Even though you think you know all the buyers in your market niche, investment bankers have big rolodexes and have contacts with strategic as well as financial and foreign buyers. Although the investment banker will charge a fee, you can often get a significantly higher price using an investment banker. This is not essential but certainly something to consider carefully.

For more information regarding our Mergers & Acquisitions Practice Group, please contact Jonathan Hodes at jhodes@stubbsalderton.com or (818) 444-4508.

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SAM Represents Client Sigue Corporation in its Purchase of Coinstar Money Transfer

SAM Partners Jonathan Hodes and Joe Stubbs represented client Sigue Corporation in its Purchase of Coinstar Money Transfer. With the closing of this transaction, Sigue is now a global leading money transfer company, doing business in 136 countries and on 6 continents. To view the press release regarding this transaction, click here.

For more information regarding Sigue Corporation, visit their website at http://www.sigue.com/

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