1. ADDING VALUE TO BUSINESS DEALS
What they did not teach you in Law School
Craig Owen White, Esq.
© All Rights Reserved 2015

2. Disclaimer
Nothing contained in this presentation is to be considered as the rendering of legal advice for specific cases, and attendees are responsible for obtaining such advice from their own legal counsel. This presentation is for educational and informational purposes only. The views of the presenter should not be construed as the views of the International Senior Lawyers Project or of Hahn Loeser & Parks LLP.

3. The Business Lawyer is to:
Assist Client in identifying, quantifying and assessing risk.
Document the deal in a manner that identifies rights and obligations of each party and can be enforced under the rule of law.
Charge reasonable fees and be promptly paid for services
Be a steward of the commercial law, statutes and regulations.
Maintain high ethics and integrity.

4. Business of Law
Any factor, event, or occurrence that has the potential to interfere with the desired outcome.

5. ClieNTs’ Negative Perceptions
Lawyers:
Are a necessary evil
Charge too much
Do not listen to me
Do not take the time to understand my business
Do not take the time to know me
Are more interested in finding problems than finding solutions
Are arrogant
Are more interested in making money than helping me.

6. Typical Transaction process Transaction Flow
Lawyers Typically Present
Business People Generally Discuss Business Opportunity
Non- Disclosure Agreement
Non- Binding Term Sheet, Letter of Intent or Heads of Agreement
Lawyers Not Present
Lawyers Typically Present

7. Typical Transaction Flow
Lawyers Working Closely with Clients to Establish Deal Points
Due Diligence and Fatal Flaw Analysis
Scheduling of Transaction and Collateral Transactions Planned
Definitive Transaction Documents
Lawyers Fully Engaged
Lawyer to Lawyer Negotiations Common

8. Typical Transaction Flow
Lawyers Fully Engaged
Exchange and Transfers:
Consideration
Title
Deal Closing (s)
Post Closing Items
Business Transition in Full Swing
Closing Binders
File Closing

9. RISK in Buyer/Sell Transactions
To be paid her price
Wants payment in agreed upon form, at the time and place agreed upon
Lowest tax possible
Non or Limited recourse
Protection against non payment or refund
Wants to receive the agreed quantity and quality of goods or services
At the agreed price
Lowest tax possible
To make payment as agreed
Protection against non- conforming goods

10. Risk Discovery Mechanisms
Self Discovery Sue
Appreciative inquiry
Knowledge of Industry, Current Events and Local Culture
Interviews of Key Contacts
Management
Key Employees
Key Customers
Key Suppliers
On Sight Inspections
Requests for Documents, Contracts, Financial Statements and Other Key Information
Representations and Warranties
Negative Covenants
Affirmative Covenants

11. Risk Allocation Mechanisms
Traditional
Creative
Indemnification for Breach of Representations and Warranties
Practice Alert – Indemnity is only as worthy as the indmenitor
Caps on aggregate give back
Basket on claims
Exceptions to Baskets
Life of the claims recovery process
Funding for claims made
Reduction in Purchase Price
Third Party Insurance of Risk
Examples –
US Export – Import Bank
World Bank
Seller Financing Funded Third Party Escrow Accounts Name that Risk Third Party Insurance Environmental Political Disruption Insurance Social Engineering Risk

12. SIX STAGES OF NEGOTIATION
Negotiation Strategies
SIX STAGES OF NEGOTIATION
Strategize Set the Climate Obtain Information Justify Positions Bargain Agree
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13. TYPES OF NEGOTIATIONS – THE THREE C’s
Competitive (like sport – always a winner and a loser) Cooperative (win-win; power is balanced; motivated to develop trust and achieve compatible outcomes) Collaborative (win-win; power is shared; trying to achieve maximum return for each; joint problem solving; akin to partnership)
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14. Negotiating Strategies
Best Alternative to a Negotiated Agreements (BANA)
Understand Your Client’s Objectives and Risk Profile
Understand the Counterparty’s Objectives and Risk Profile
Industry Standards and Norms
General Economic and Other Conditions (including time as a factor)
Keep Client Expectations Realistic
Cost
Time
Distraction

15. WHAT IS A SUCCESSFUL OUTCOME?
An agreement that meets the legitimate interests of each party
Resolves conflicting interests fairly
Is durable
Improves, or at least maintains, the relationship between the parties
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16. BARGAINING STYLES/TYPES
1. Competitive (WIN/LOSE)
Argument and persuasion
Lack of trust
Concern for victory
Holding out
Creating deadlines
2. Cooperative/Collaborative (WIN/WIN)
Proposing and applying principles
Establishing mutual trust
Developing options
Trading off priorities and brainstorming
Establishing time frames
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17. IMPASSE AND DECISIONS Competitive Possible impasse
Compromising & splitting the difference
Adding conditions
Cooperative
Impasse less likely
Mutual decisions through joint problem solving
Creating alternate outcomes/deals
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18. FINALIZING THE AGREEMENT
Competitive
Insisting your forms be used
Unnecessary negotiations over draft language
Cooperative
Working on a single agreement
Agreeing to terms
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19. STAGE 1 - STRATEGIZE
Identify Your Currencies (i.e. what is it you have to offer) Plan Your Currencies Other items besides money: Number Timing Administration Support Future Service Referrals
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20. STAGE 1 - STRATEGIZE
List your Objectives - Objectives define scope and set the benchmark for success What are your client's goals What are the goals of the other side What can your client concede What must your client achieve Your first offer BATNA (best alternative to a negotiated agreement)
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21. STAGE 2 – SET THE CLIMATE
Learn To Set a Positive Climate Conversational Positive Relational Energetic Set the climate to suit the other negotiator’s style Probe for attitudes
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22. STAGE 3 – OBTAIN INFORMATION
Learn Focused Listening Techniques
Focused Listeners Encourage Speakers
Physically:
Nod
Take notes
Verbally:
Offer encouraging phrases
“I see …”
“Tell me more …”
“Hmm …”
“That’s interesting, please go on …”
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23. STAGE 4 – JUSTIFY POSITION
Get negotiator to state their price or position first Give your counter-offer Give the lowest (highest) price you can justify
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24. Other items besides money
STAGE 5 – BARGAIN
Other items besides money
Number
Timing
Administration
Support
Future
Service
Referrals
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25. STAGE 6 – AGREE
Successfully Negotiate a Win/Win Situation Both sides are better off You were each treated fairly You would negotiate with the other negotiator again Legitimize the Terms Put the terms in writing
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26. DEALING WITH PERSONALITIES
Know your team strengths, and ignore the distractions
Have a strategy for each personality:
the “Big Picture” person
the Alpha male/female
the Bully/Intimidator
the Nit-picker
the Waffler
the Silent One
non-English speakers
the Insecure Negotiator
the Intransigent One
the Consensus-builder/Collaborator
your New Best Friend
the Problem Solver
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27. COMMON MISTAKES TO AVOID
Assuming the negotiation is a fixed pie and creating a win-lose negotiation
Overvaluing your assets or position
Abusing your power or leverage
Not knowing what you want
Over-commitment to a certain outcome
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28. Common Client Misperceptions
MMYTH
Reality
Boilerplate language is meaningless and not worth the time to read it.
The Closing is the most important part of the business deal.
Lawyers are expensive and only see problems that will end up costing me more or screwing up my deal
Often the most important part of the deal as it controls procedures for accessing claim relief.
Business Deals are frequently collaborative by nature and the parties may need each other’s post –closing cooperation.
Proactive lawyering saves the client money.

29. Preamble South African Style:
Documenting the Deal
Preamble
South African Style:
1. PARTIES
1.1 LIME DISTRIBUTORS OF SOUTH AFRICA
(PROPRIETARY) LIMITED
1.2 ANGLO-ALPHA LIMITED
Identifies the parties and their legal capacity Practice Tip: Make sure signature page matches the preamble
United States Style: This SUBSCRIPTION AGREEMENT (this “Agreement”) is hereby made and entered into effective as of [July 1,], 2015, by and between ABC, Inc., a for-profit Ohio corporation (“Purchaser”) and Health, Inc., a Delaware corporation (the “Company”), pursuant to and in connection with that certain Memorandum of Understanding, effective as of February 2, 2015 by and among Purchaser, the Company (the “LOI”).

30. Background or Recitals
Basic Contract Components
Background or Recitals
PURPOSE:
Helps the reader to understand who the parties are and what they were seeking to achieve. Practice Tip: Should brief and neutral. Recitals are generally not a part of the agreement unless incorporated into the agreement.

31. Interpretations or definitions
Basic Contract Components
Interpretations or definitions
PURPOSE:
Creates Definitions and Conventions to assist the reader. Practice Tip: Read Agreement carefully to ensure all terms have the intended meaning and are not circular.

32. Central Business Terms
Basic Contract Components
Central Business Terms
PURPOSE:
Clearly Record of the Primary Business Agreement:
What is being bought, sold or exchanged
Basic Business Terms - Price, Time, place of exchange or delivery
Conditions Precedent to Legal Obligation to Perform Maturing
Practice Tip:
Use plain English and be clear as to what is important to your client. Example – Time is of the Essence.

33. Business Discovery and Reliance
PURPOSE:
The structured disclosure of risk factors as the foundation for price and other key business terms.
Establishes the parameters of self- discovery of risk factors
Disclosing party structured disclosure of information/risk factors upon which the counterparty is entitled to rely.
Practice Tip: Discovery is a two-edged sword. Trust but verify.

34. Covenants and Collateral Agreements
Basic Contract Components
Covenants and Collateral Agreements
PURPOSE:
Collateral Matters that sometime impact the risk profile of the deal:
Collateral promises and undertakings related to the primary business deal.
Affirmative Covenants – Things a counterparty agrees to do.
Negative Covenants Things that a counterparty agrees not to do.
Practice Tip: If these agreements are important enough to document they are important enough to warrant monitoring systems and clear consequences for failure.

35. THE CLOSING PURPOSE: To clearly identify:
Basic Contract Components
THE CLOSING
PURPOSE:
To clearly identify:
Time and place for transaction(s) to be consummated and the time and manner of counterparty performance and when and where title (and risk) changes hand.
Practice Tip: Be clear as to the deliveries that are required to be made and the actions taken. The devil is in the details and the lawyer who masters the details will be the master of the deal.

36. Termination Provisions
Basic Contract Components
Termination Provisions
Purpose:
To be clear on when and what will break the deal and cancel the counterparties’ respective duties.
Practice Tip: Be clear as to the consequences of a termination and what if any provisions of the previous agreement is to survive.

37. Disputes Resolution
Establishes the venue and governing laws and rules for resolving conflicts and the selection and jurisdiction of the person or entity selected to resolve the dispute. Practice Tip: Think carefully about what your client practically needs to achieve and when before deciding on the dispute resolution forum, venue or governing law.
PURPOSE -

38. MISCELLANEOUS (Boilerplate)
PURPOSE -
Intended to be industry standard provisions for common understanding and efficiency.
Has evolved to anything but what it appears to be.
Practice Tip: Read carefully as they can save or sink your client in times of crisis.

39. Common Dispute Resolution MECHANISMS
Choice of Resolution
Court Litigation
Expedited Arbitration
Mediation
Multi- Tier Clauses
Expert Determination
Out of Court Dispute Resolutions

40. Considerations When Negotiating Dispute Resolution Clauses
Enforceability
Forum Neutrality
Costs
Time
Quality Outcome
Neutral Forum
Confidentiality

41. WHEN THE DEAL GOES BAD
PARABELLUM

42. Be Prepared WHEN THE DEAL GOES BAD
Identify all key parties and stakeholders and interested parties
Identify your client’s permanent interests
Identify all environmental factors including time, venue and jurisdiction
Identify your client’s key weaknesses
Locate and review all documents and instruments and any shortcomings

43. THANK YOU