Scott Naturman Discusses Post-Closing Considerations with Above the Law

Scott Naturman discussed certain post-closing considerations in connection with an acquisition with Above the Law as part of a series offering a step-by-step guide for general counsel navigating mergers and other corporate transactions.

In the article, Naturman outlined five key priorities for law departments in connection with the closing of a merger: addressing deficient compliance programs , analyzing commercial contracts with overlapping parties, negotiating new employment and IP agreements, properly housing the acquired entity and tracking post-closing deadlines.

“Almost every deal we do, we find deficiencies, and it’s not me necessarily, but it’ll be my HR and IP colleagues looking at employment-related contracts and finding deficiencies in them,” he said. “So that’s something that often has to be fixed.”

He also discussed the problems that can arise related to the merged entity’s commercial contracts. As mergers often occur between companies in similar industries, the merged entity may have contracts with the same customers and suppliers as the acquirer.

If multiple contracts with the same customer or supplier have differing terms, Naturman noted, the merged business will look to maintain the best possible outcome while combining the contracts.

He also emphasized the opportunity for law departments to make progress on essential human resources and intellectual property tasks after closing.

“You want the in-house folks as soon as possible to be speaking with key employees and trying to lock them into agreements on their own paper, but you can’t have anything become effective until the deal closes, of course,” Naturman said. “If you have a delayed closing, you can reach a wider audience, while if it’s simultaneous, you don’t have that opportunity.”

Naturman stressed the importance of planning where the house the acquired entity following a merger.

“I don’t think enough of that planning happens. It’s often we’re brought in five years later to help, then they say: ‘Help us. It’s a complete mess. How do we reorganize ourselves? How do we get this under control?’”

He added that staying on top of deadlines – such as knowing when a customer or supplier contract will expire – is critical to successfully merging multiple entities.

“One thing I’ve seen over the course of my career is less diligence being done, or more targeted diligence,” he said.

Read the article.