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How In-House Legal Teams Can Support M&A From Start to Finish

May 10, 2021, 8:00 AM

Having been on the inside of major merger and acquisition transactions, most recently as DraftKings’ general counsel, I’ve had a first-hand perspective on how important it is for in-house legal teams to be involved early and often with business executive teams throughout the process.

The following are key points executive teams need to keep in mind when working with, and setting expectations for, the in-house legal function as M&A deals move from business agreement to closing and through integration. They need to remember that the in-house legal team are experts in the company and should be imbedded with the business functions to be able to anticipate legal issues before they arise, and craft creative solutions to problems.

Bring the Legal Team in Early

After the executive team does the initial, critical work of determining that an M&A deal is the best way to achieve key business objectives, the next focus is logically on execution. How will the resulting leadership bring together the two organizations? Is there agreement on product direction, go-to-market strategies, staffing, company culture, etc.?

These discussions are critical while evaluating a potential deal, and bringing in your internal legal leadership early is essential. Being sure your legal team is aware of key issues allows the team to anticipate post-closing issues and resolve them proactively with the structure of the deal or by explicitly calling out critical obligations of each party.

Keep an Eye on All of the Business

As the transaction begins to ramp up, term sheets are negotiated and drafted, diligence begins, long-form draft negotiations begin, etc., the legal team must focus on the transaction, as well as on providing steady service to the rest of the organization throughout the deal process.

The legal function must continue to work closely with the business to meet business-critical deadlines, turn around contracts, approve assets, etc., and otherwise allow the rest of the business to keep pressing forward. In addition, the in-house attorneys must communicate if/how the deal impacts the operations of parts of the business.

For example, many M&A transactions have a time gap between signing and closing and there may be interim operating covenants that must be observed. The attorneys, at a minimum, should inform relevant business units of any relevant restrictions.

Ideally, the in-house deal team would recognize how interim operating covenants would impact the business and negotiate them away, or at least narrow them to the maximum extent possible.

Align with the Organization

To be able to effectively work the deal while supporting the business, the legal department needs to integrate into the business. The attorneys must be proactive and build a relationship with the business as trusted advisers and business partners. Building this relationship takes time and effort, but a few things can help with the process.

The first is integrating the legal team. There are many ways to do this, but one particularly effective way is assigning an attorney (or two or three) to a particular business unit (for example, CRM or acquisition marketing).

Those attorneys embed in the business team and become experts in how those teams contribute to the business and how they measure success. As a result, those attorneys are better able to anticipate legal issues before they arise, craft creative solutions to problems, and focus on how to leverage the legal function to assist those teams in accomplishing their goals and, in turn, driving revenue.

Next is providing perspective gained through working with different business units across the organization. By the nature of the position, many of the legal team members have a high level of cross-functional visibility.

High-performing in-house attorneys have a decent perspective on how the actions of one business unit can impact another business unit. When working with business units, the attorney should facilitate communication on issues that impact other teams, and seek to be the conduit bringing teams together to integrate action plans across different functions.

Finally, it’s important that the executive team buys into the legal department integration and appropriately messages the rationale behind such deep legal involvement in “non-legal” areas to the business teams. This shows an organization-wide buy-in to the proactive approach of the legal department in providing advice to the business and sets up the legal team for success in becoming more effective in supporting the business and ultimately, driving revenue.

Pull in the Right Tools at the Right Time

Embracing technology helps streamline the legal team’s operations resulting in more efficiency in delivering a higher-quality level of advice to the business in a more timely manner.

I have used technology for everything from tracking IP licenses and building disclosure schedules to approving marketing assets and promotional campaigns. Combining forward-thinking tools enables attorneys to stay organized and nimble, and shortens turnaround time while simplifying approval processes. Being able to quickly identify what is in your thousands of agreements and licenses and distill that information into guidance that is immediately useful to the business can give the business an advantage, via the legal team.

These tools are also invaluable from an analytics and tracking perspective. Centralized approvals, summarized contractual terms, data around volume and type of requests and documents—all of these inputs allow management to gain perspective on the work done by the department, even down to the individual attorney level.

This data is easily translated into a justification for budget for new hires, evaluating the overall team (or individual) performance, and even contributes to managing cost (and/or revenue) by vertical.

The amount and complexity of technology used by the legal team may vary depending on the business, but having the right tools helps you streamline departmental operations, meet aggressive timelines, and keep pace and relevance with the teams you support.

Outside attorneys are experts in M&A or IPOs or venture financings or whatever else, but your in-house team are experts in your company—that’s the true value of having in-house counsel. Leveraging these actionable tips on how to use that team to your advantage will pay dividends in the end.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Author Information

Tim Parilla is CLO at LinkSquares. He previously spent seven years as general counsel for DraftKings, where he built and scaled the legal function and managed the company’s legal posture throughout financing and fundraising, litigation, and regulatory actions. Prior to DraftKings, he was general counsel for Everest Gaming, a European-based online poker and casino operator.

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