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Super Lawyers 2022

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Needham Law Firm Attorneys named New England Super Lawyers

NEEDHAM, MA – The business law firm of Gennari Aronson, LLP is proud to announce that its senior partners have again been selected as Super Lawyers in the New England region for 2022.  Neil Aronson was recognized as a Securities & Corporate Finance Super Lawyer, Lawrence Gennari and Laura Glynn were both named Super Lawyers in the Mergers & Acquisitions category.  In addition, both Aronson and Gennari were named Top 100 Massachusetts Lawyers. Other attorneys selected from the firm include partner Michael Douglas, as a Rising Star, and partner Elizabeth Davenny, both of whom were selected in the Business/Corporate practice area

As Super Lawyers, Gennari, Aronson, Glynn, Douglas, and Davenny are part of an elite group of top attorneys in Massachusetts.  No more than 5 percent of the lawyers in the state are selected by Super Lawyers.  Lawrence Gennari and Neil Aronson have consistently been awarded this recognition each year since its inception in 2004.  Laura Glynn has been awarded Super Lawyer status for the last 12 years.

Gennari Aronson serves innovative companies, entrepreneurs and the investors and venture capital firms that finance them.  The firm also curates the annual Authors and Innovators Business Ideas Festival.

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About Super Lawyers

Super Lawyers, a Thomson Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. Only five percent of lawyers in the state are chosen. The annual selections are made using a rigorous multi-phased process that includes a statewide survey of lawyers, independent research evaluation of candidates, peer reviews by practice area, and a good-standing and disciplinary check. For more information about Super Lawyers, go to superlawyers.com.

About Gennari Aronson, LLP

Gennari Aronson, LLP serves innovative companies, entrepreneurs and the investors and venture capital firms that finance them.  Founded by veterans of Boston’s largest law firms, Gennari Aronson exemplifies the same entrepreneurial spirit that guides many of its clients.  The firm has established a strong network and commitment to the technology, consumer, innovation, and emerging growth sectors. The firm also curates the annual Authors and Innovators Business Ideas Festival, www.AuthorsInnovators.org.

The firm has offices at 250 First Avenue, Needham, MA. The website is www.galawpartners.com.

Keep More of the Sales Proceeds

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Sellers: Three simple tips for keeping more of the sales proceeds!

Last year, GA was counsel in more than 40 transactions, representing sellers in a significant number of them.  For sellers that want to maximize sales proceeds at closing, we urge them to keep three things in mind:

Spend time on the LOI.  The letter of intent is crucial and should spell out details of the purchase price and how the seller might have to give it back.  All too often, the parties will sign an LOI stating that the transaction will be on “customary terms and conditions” without specifics.  Sellers can press the buyer to define which representations and warranties are most “fundamental,” how long they will survive, and what dollar holdback escrows will be established.  Sellers have the most leverage before an LOI is signed and the process kicks off—and they should use it. For buyers, more specificity can avoid deal risk and fundamental misunderstandings before documents are drafted.

Consider Structure Upfront.  Typically and for a variety of tax and corporate reasons, buyers like to buy assets and sellers like to sell equity. Sellers should consult their accounting and legal advisors in advance to assess the impact of transaction structure before an LOI is signed.  Can a seller take advantage of 1202 of the Internal Revenue Code providing for the exclusion of capital gains on the sale of small business stock?  What are the tax implications if a buyer agrees to a stock purchase but wants to make a “338(h)(10) election? Whether key contracts, licenses, and relationships can be transferred without consent also will factor into the overall decisions on structure.

 Think about R&W Insurance.  Depending on the size of the transaction, sellers can ask the buyer to purchase an insurance policy to be the source of recovery for the breach of any seller representations and warranties. That can allow the parties to eliminate haggling over indemnity escrows and survival periods and also give the seller more certainty over the amount to be paid at closing. This too should be considered and included as appropriate at the LOI stage.

More time spent at the LOI stage can reduce friction and conflict as the deal process moves forward.

 

M&A FAQ’s

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2021 was a historic year for middle-market M&A with over 14,000 transactions in the US, the highest on record over the last ten years.  That trend is expected to continue through 2022.  Gennari Aronson counsels both buyers and sellers in negotiating and structuring transactions. Entrepreneurs and management teams considering a transaction frequently ask similar questions:

I’m getting multiple calls weekly about selling my business. How should I be thinking about these?

Private equity buyers want to deploy capital and they are competing to acquire “quality” companies. Strategic buyers are also on the hunt for opportunities to expand market share, grow in new markets, and secure new talent. What to do? Potential sellers should consult with their board advisors, accountant, and legal counsel, and also consider engaging an investment banker to help manage a discreet and competitive process.

I have an offer, now what?

Negotiating and finalizing a letter of intent (an “LOI”) is critical. Usually, the most important terms of the LOI are: price, overall terms, including post-close employment, and exclusivity period.  This is especially true if any portion of the purchase price is contingent on post-closing operational performance. In addition,  Sellers should focus on how they might have to give money back, post-closing—instead of simply stating that the sale will be “on customary terms and conditions for similar deals.” Hammering out details upfront in the LOI will save legal and accounting fees later on and also reduce the risk of the deal blowing up later if the parties can’t agree on what’s “customary and standard.”  Representation and warranty insurance should be considered.

What happens after the LOI?

Typically, the transaction proceeds with the buyer delivering the draft purchase agreement while conducting due diligence, including a quality of earnings review, in parallel. With an NDA in place, the seller should be prepared to provide access to the company’s contracts, accounting records, and other non-public information. Access to key employees and customers should be carefully considered and timing for the same, mutually agreed.

How long is the “typical” M&A process?

Most transactions can be completed within 30-90 days, depending on if regulatory or contract assignment approvals are required or whether any other hiccups occur during due diligence. Advisors can help sellers to anticipate roadblocks in advance, even at or before the LOI stage, and as we often tell potential sellers: “better to address potential problems on your own and in advance instead of in the middle of a transaction process.”

M&A Spotlight with American Holt Corporation

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American Holt Corporation is a technology-enabled provider of high-quality aftermarket replacement parts for production and processing machinery used in several high-throughput manufacturing environments. It specializes in parts supporting the food and beverage, paper converting, material handling, and warehousing manufacturing processes among other high-usage sectors.  Last December, Arcline Investment Management, a growth-oriented private equity firm, announced that it had acquired a controlling stake in American Holt Corporation from Founder and CEO Jon Levy. The existing management team, with Arcline’s support, will continue to lead American Holt through its next phase of growth. Gennari Aronson served as counsel to American Holt in the transaction.

What motivated you to consider a transaction after so many successful years as an independent company?

American Holt experienced twenty-five years of consistent growth without ever having a budget or a forecast.  We combined great quality with great service and we kept growing to the point where we needed more structure, so I started looking for the right partner to get us to the next step.

What was the process like?

You may want to run away!  The process was exhausting.  I solicited advice from trusted advisors and was informed that I need a great accountant, lawyer and investment banker, and they all have to get along.  I had the accountant already.  I interviewed nine bankers, and Leo Whitt at Baird quickly rose to the top.  Choosing a lawyer turned out to be an easy choice.  Two of my trusted advisers recommended Gennari Aronson, so I called my accountant to get his thoughts.  He suggested I use Gennari Aronson as well.  That was the easiest part of the process.  The actual process took ten long months.  Be prepared to work twice as hard as you ever have.  Having the right people to guide you through the process is critical.

What advice would you give to anyone who might be fielding calls from potential buyers and otherwise considering a similar path?

Thinking “I’m a successful businessman, I can do this myself.”  There is a temptation to try this on your own, don’t do it.  If you are contemplating the sale of your largest asset, hire good people.  Looking back on the process I can say that my lawyer, banker and accountant made this process much easier.