Strategic Counseling on an Auction Transaction

Thompson Coburn represented a major electric motor company in connection with its successful purchase of a larger competitor for $1.8 billion in an auction transaction. As part of its bid, our client had to submit comments on the seller's form acquisition agreement. The seller's form was predictably one-sided, but rather than take extreme positions or raise issues unimportant to our client, we worked with our client to prepare a reasonable and balanced response. Our client won the bid, and we successfully completed transaction negotiations.

After the transaction closed, the seller told our client that another bidder had offered an almost identical purchase price, but in contrast to our client, the other bidder had submitted an aggressive mark-up of the acquisition agreement. The seller said the tipping point was the fact that our client's comments on the documents were fair and reasoned, and the seller went with our client because it felt it could work with our client and its attorneys.

Managing Accounts Receivable and Credit Terms to Minimize Potential Credit Risks

As the turbulent economy continues, commercial bankruptcies remain a frequent occurrence. If one of your customers files for bankruptcy protection, you may only receive a small fraction of what is due to you after a long wait. As a business owner, there are steps that you can take to help minimize your losses should one of your customers file bankruptcy.

  • Identify those customers who have large receivables that are significant to your business.
  • Review your credit terms with each customer and its historic payment practices (e.g., is the customer a slow pay?).
  • Consider restructuring your credit terms to minimize your risk (and your potential losses), which may include (a) requiring a deposit from the customer or (b) moving to a 20-day payment period to qualify as an "administrative claim" under the Bankruptcy Code. These are tough economic times, which may require tough credit terms.

Making Lemonade out of Lemons (i.e., Making the Most of an Unsuccessful Deal)

Having spent a significant amount of money on professional adviser fees and data room charges from a third party adviser, a Thompson Coburn client was understandably frustrated when its significant sale transaction failed due to the deteriorating economy. To make the blow a little softer, Thompson Coburn attorneys created a secure extranet on the firm's website and migrated the company's entire universe of documents to the extranet site. The client now uses the extranet site to store its documents electronically. The client's facilities, which are located in various states, are also able to upload documents, such as licenses and correspondence with regulators, to the extranet system with great efficiency. When the next potential deal emerges, the client will be ready with a state-of-the-art electronic due diligence room.

Being in the Right Place at the Right Time to Capture Strategic Government Contract

Our client, a successful government contractor, served as the lead subcontractor on a large Department of Defense (DOD) contract for video/teleconferencing (VTC) services. The prime contractor got in trouble with its bank, which called the prime contractor's line of credit and gave the contractor 30 days to cure its defaults. Recognizing the enormous value of the DOD contract, our client negotiated a purchase of the prime contractor.

In order to achieve the client's goals while minimizing the client's risk, we recommended a strategy through which the DOD would approve the novation of the VTC contract so that we could use an asset purchase structure, rather than a stock purchase structure, and thus avoid the very real likelihood of substantial contingent liabilities. We also negotiated with the prime contractor's bank for a division of accounts receivable as well as a right to acquire key assets related to the VTC business. The VTC division is now a major growth vehicle for our client, helping it earn distinction as one of the fastest growing businesses in the country.

Fresh Eyes and Seasoned M&A Counsel's Skill Set Find Pathway to Settle Significant IP Litigation

More and more companies involved in significant litigation are retaining special settlement counsel to investigate and, they hope, achieve a settlement of the dispute, while their litigators continue their principal task of aggressively pursuing claims or defenses. Clients sometimes find that seasoned corporate negotiators, whose focus is on completing the deal rather than winning the argument, are able to provide a fresh perspective and sophisticated negotiating skills to identify solutions that previously have eluded the parties. In one particular case, Thompson Coburn was hired as outside neutral settlement counsel. We devised and implemented a creative, commercial solution to a nine-figure intellectual property dispute between two major corporations, which allowed both companies to bring the litigation to an end and accomplish their commercial objectives.

Designing a Solution to a Knotty FCC Dispute

Thompson Coburn serves as lead outside counsel to a major nuclear energy trade association in negotiations with the FCC over nuclear plants' use of special communications headsets. These headsets substantially reduce workers' exposure to radiation but operate on spectra owned by TV broadcasters. To overcome this challenge, we devised technical and regulatory strategies and negotiated an arrangement with FCC licensees and FCC senior staff in the Office of Engineering and Technology as well as the Wireless Telecommunications Bureau. Eventually, we secured special temporary authority, experimental licenses and a waiver of certain FCC rules so that the plants could continue to use the communications headsets inside the nuclear plants.

Using Export-Import Bank Financing to Sweeten the ROI for an International Business

Several entrepreneurs recently formed a business to provide foreign manufactured goods to oil companies operating in Angola. While the business was profitable, the high cost of capital (and very high interest rates) in Angola, together with regulatory restrictions on the source and flow of funds, severely limited the business' economic upside. Thompson Coburn attorneys devised a financing structure that utilized Export-Import Bank guarantees, effectively lowering the borrowing cost by 70%, thereby positioning the business for a much stronger return on investment going forward.

Planning Ahead for Future Spin-off Pays Future Dividends

Thinking about selling an operating division of your business within the next few years? Consider preparing for that sale in advance by separating that division from your other divisions. You can:

  • Create a new LLC subsidiary that is 100% owned by your existing business entity, and move the assets and liabilities associated with that division into the new LLC. Because the LLC will be ignored for tax purposes for so long as it is 100% owned by your existing business, creating this separation will not have a current tax effect but will likely make it much easier to sell the separate division down the road.
  • Track the financial results of the division separately so that it will be easier to prepare auditable financial statements for each division.
  • Incentivize employees based on the operating results of the division for which they work, giving them a more direct connection between the results that their efforts can impact and their compensation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.