Counsel to Counsel - September 2008 - (Page 10) best practices Being a Thought Partner CHARLES “CHuCK” SCHuLMAN | THE HAVI GROuP LP Charles “Chuck” Schulman is corporate vice president and general counsel of The HAVI Group LP, a private company that provides distribution services to McDonald’s restaurants in more than 40 countries. Chuck recently co-chaired a Counsel to Counsel forum on managing complex transactions. He can be reached at CSchulman@havigroup.com. CRITICAL ANALYSIS IN TRANSACTIONS: implementation steps Privately held HAVI Group global divisions occasionally propose acquisition (or divestiture) opportunities. However, the Chicago-based company does not have an integrated in-house legal or acquisition group. Further, the countries and/or regions in which it does business sometimes present unique cultural challenges. situation • Assess. Assess the opportunity to ensure it fits your corporate strategy. • Assemble. Identify and assemble a cohesive team of internal and external resources. • Coordinate. Actively engage all impacted constituencies. • Challenge. Apply critical thinking at each step. With regard to an acquisition or divestiture, the general counsel’s role is multifaceted. During a transaction, the general counsel must assemble in-house resources and outside consultants to assure maximum leverage of expertise regarding strategic, legal and personnel issues. challenge in-house counsel Be sensitive to cultural issues. For instance, are there regional requirements that will impact the way you generate the acquisition’s financial statement? If, like HAVI, you have operations around the world, will the acquisition impact your foreign currency exposure? Will there be negative tax consequences due to additional foreign income? From a personnel standpoint, are there local union requirements? Do those requirements match the way you or your customers treat workers? Will the facility require further or immediate capital-intensive upgrades? Does the manufacturer have appropriate levels of insurance? Is the right number of people, with the proper skill sets, already in place to run the operation? Is there sufficient leadership within the division to oversee the plant’s operations, or will you have to add local executives or otherwise augment? Then review the proposed legal representation and costs. Does the division really need to retain a top regional or international firm to conduct a relatively small real estate transaction? Or, on the other hand, is it spending enough? It’s the general counsel’s responsibility to make sure the level of outside representation is sufficient. The general counsel has an insider’s knowledge of the company’s strategic goals, especially about acquisitions or divestitures. Therefore, he must view himself as a thought partner, one who’s free to challenge the thinking of company executives and outside advisers each step of the way. approach adopted In other words, the general counsel’s role is sometimes, as the old story goes, like being the donkey among a herd of horses. The horses— executives and/or outside consultants—may all be rushing in one direction together without pause. The donkey sees this but stops and confirms whether it still makes sense to continue this way. Similarly, the general counsel takes his time and evaluates every aspect of the transaction, ensuring deal steps move in the right strategic direction and at the right pace. There are several considerations HAVI makes as part of this process in all of our deals. Does a proposed manufacturing acquisition, for example, advance the strategic business of not only the division, but the company too? Or will it conflict with corporate strategies with which regional management may not be familiar? Begin by assessing the in-house personnel in the geographic region or country in which the acquisition or divestiture will take place. Determine whether and to what extent help will be needed in legal, operations, financial, human resources, risk management and executive leadership. At HAVI, success means closing an international transaction within a reasonable period of time and within a reasonable cost. All stakeholders, from tax consultants and lenders to key suppliers and customers, are fully apprised of the deal beforehand. The acquisition advances the ball and all relevant parties have had an opportunity to contribute. measuring success 10 LexisNexis® Martindale-Hubbell®
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