M&A Dealmaker Perspectives on Transaction Structure and Value

Dean S. Nordlinger*

Recently, I hosted the third session of Blank Rome’s new on-demand webinar series, “Strategically Speaking,” with featured guests Mitchell Martin of The McLean Group and Scott Brezler of Dixon Hughes Goodman LLP bout the key issues that arise in mergers and acquisitions (“M&A”) transactions involving govcon firms. You are invited to watch the recording on demand here; I hope you find it helpful and informative.

Martin has held a number of financial advisory positions with leading investment banks focused on M&A for logistics and defense and government services companies, and is currently the co-head of The McLean Group’s M&A practice, as well as its Defense, Government & Intelligence (“DGI”) practice. Brezler currently heads the Government Contracting practice for Dixon Hughes Goodman LLP and previously served as chairman of the Small and Emerging Contractors Advisory Forum.

Our session includes an informative and helpful discussion, including:

• • • A high-level overview of M&A:
      • • A seller’s perspective on an M&A transaction;
        • A buyer’s perspective on an M&A transaction;
        • The reality of the M&A process:
          • • Time, resources, and money; and
            • Deep scrutiny of a seller.
    • A high-level overview of purchase price (and tracking the value):
      • • Identifying and understanding the purchase price component parts;
        • Breaking down the component parts and transaction terms to track value;
        • What a seller gets at closing vs what remains “at risk” post-closing; and
        • What’s the impact of each item/issue on an aggregated basis.
    • Structuring the purchase price:
      • • Use of and recent trends in earnouts and impact on value; and
        • Use of and recent trends in rollover equity on value.
    • The impact of acquisition/tax structuring on purchase price and value:
      • • GovCon regulations impact on acquisition structure;
        • Acquisition structure impact on transaction value to seller; and
        • Acquisition structure impact on transaction value to buyer. 
    • Weaponizing working capital:
      • • Net working capital and impact on overall deal value;
        • Negotiation of working capital (in the letter of intent); and
        • Things sellers do to their advantage, things sellers do to their detriment.
    • Importance of employee incentive plans & retention:
      • • “Key employees” as a buyer condition to closing;
        • Negotiation of key employee retention bonuses:
          • Cooperation between buyer and seller on what it should be;
          • Does the seller have any preexisting retention in place;
          • Who bears the burden vs. benefit; and
        • Buyer redirect of purchase price to use as retention bonuses for key employees.

PAST SESSIONS OF STRATEGICALLY SPEAKING NOW AVAILABLE ON DEMAND:

Session I: Navigating the Future of Office Leases with Featured Guests Chethan Rao and Andrew Roberts of global commercial real estate firm Newmark. Watch the Webinar >>

Session II: Pivoting & Positioning Small Businesses for Dynamic (Full & Open) Growthwith Featured Guests Gilbert Dussek of Gunnison Consulting Group and Kevin Robbins of Blue Delta Capital Partners. Watch the Webinar >>

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*Dean Nordlinger is a partner in our Corporate practice whose new “Strategically Speaking” webinar series includes discussions with a variety of seasoned professionals and subject matter experts about critical and challenging issues that government contractors and other companies (and business owners) face throughout their life cycle.