SAN FRANCISCO--(BUSINESS WIRE)--SRS | Shareholder Representative Services, the leading post-closing expert for private company mergers and acquisitions, today announced the release of the third edition of Tales from the M&A Trenches: Pre-Closing Practices to Mitigate Post-Closing Risks. Co-authored by SRS Managing Directors, Paul Koenig and Mark Vogel, the book presents issues that can impact parties after deals close, including potentially problematic deal terms, challenges with financial statements and tax matters, and the complexity surrounding earnouts and disbursements of consideration held back at closing.
Consideration that is held back at closing for potential purchase price adjustments and indemnification claims typically ranges from 10-20% of deal price, and SRS market research reveals that industry averages are on the rise. This usually means that millions of dollars are at stake after closing, even for transactions paid with cash upfront. For deals with earnouts, where consideration is subject to future milestones, the amount of the contingent consideration is often greater than the initial payment.
“With M&A activity expected to increase in 2012 and contingent consideration on the rise, the parties to merger agreements strive to avoid post-closing claims that can complicate their new partnerships,” said Mark Vogel, Managing Director at SRS. “As the first company to provide professional shareholder representation, SRS has the knowledge and depth of experience to prepare buyers and sellers for what to expect well before the signing of an M&A agreement.”
Tales from the M&A Trenches distills years of SRS experience managing a broad range of issues that arise into a manual of best practices for acquirers, private company managers, investors and their legal advisors who are negotiating transactions. The 125-page third edition also features editorial commentary by Diane Holt Frankle, a leading Corporate Partner with Kaye Scholer in Palo Alto, who offers insights from the perspective of buyers involved in M&A transactions.
"Mergers aren’t complete once the paperwork is signed. Clients need to understand up front what can go wrong after closing so that the agreements are structured effectively with provisions included to deal with any issues that buyers may encounter after the deal is finalized,” said Frankle. “I’m pleased to contribute to Tales from the M&A Trenches, an essential resource for everyone in the dealmaking community.”
Highlights from the new edition include articles on the following topics:
- The problems with pro rata payment calculations
- Challenges with the management of third-party claims
- Problems with purchase price adjustments based on working capital calculations
- Who is responsible for sales and use tax
- Focusing on earnout outcomes rather than milestones envisioned at closing
“Because SRS’ work begins at closing and our team reviews hundreds of merger agreements each year, we are in a unique position to share an in-depth view of what actually happens after closing and help sophisticated investors, entrepreneurs and their counsel avoid costly disputes and better manage post-closing risk,” said Paul Koenig, Managing Director at SRS.
About the Book
Tales from the M&A Trenches: Pre-Closing Practices to Mitigate Post-Closing Risks is written and published by SRS and printed by RR Donnelley. The book is available on the SRS web site at www.shareholderrep.com/tales.
SRS | Shareholder Representative Services is the global expert in professionally managing the post-closing process to safeguard the selling shareholders' interests in private company M&A transactions. As the shareholder representative, SRS manages all post-closing matters, including working capital and other purchase price adjustments, tax reviews, earnouts, the handling of claims, disputes and litigation, communications with acquirers and selling shareholders, and management and distribution of escrow and expense funds.
SRS has a senior-level team of more than 30 attorneys, financial professionals, and operations and systems experts and the most sophisticated operational, tracking and reporting systems ever used by a shareholder representative. On deals valued in excess of $25 billion in aggregate, SRS has represented more than 400 venture capital and private equity firms and over 30,000 shareholders in 44 countries. No one has as much knowledge and experience in serving as a shareholder representative and navigating the issues that arise post-closing than SRS. For more information visit www.shareholderrep.com.