BMK Leading Increasingly Larger M&A Transactions: Trend Toward Assembling Teams of Subject Matter Experts and Cost-Effective Closings
Amidst the robust mergers and acquisitions market of the past few years, Brown Moskowitz & Kallen increasingly finds itself leading larger and more complex transactions, many valued above $100 million dollars. While clients may have always entrusted agile, experienced smaller business law firms like BMK to manage their day-to-day legal needs, creating an outsourced general counsel relationship, both buyers and sellers have typically sought large, multi-practice law firms to manage complex M & A transactions. The thought process is that a large law firm can serve as a “one-stop shop,” providing access to legal subject matter experts essential to the execution of a transaction under one roof. The challenge for clients is that access to attorneys practicing in various disciplines at a larger firm does not guarantee consistent best-in-practice legal counsel across the spectrum.
When an experienced smaller law firm is leading a larger transaction, it has unfettered discretion to select the best-in-class advisors, legal and otherwise, to ensure a successful, expeditious and cost-effective closing orchestrated by the most qualified experts in every category. There is no mandate or implied directive for the lead transactional attorney to utilize her partners or colleagues.
A smaller law firm with a quality network can painstakingly select the most qualified experts to address the issues presented in a given transaction – absent any pressure to keep all disciplines in house. A recent example is the acquisition of Contract Filling Inc. (CFI) by Arizona Natural Resources, a portfolio company of CORE Industries. CFI, a leading New Jersey-based alcohol fragrance blending and filling company, is a long-term client of BMK. Stuart M. Brown, partner and co-chair of the commercial transactions practice at BMK, assembled a best-in-class team of subject matter experts to enable the 40-year-old company to complete its sale to ANR.
“BMK has enjoyed a long-term relationship with CFI. We understood the priorities of its leadership team, Bill and Carol Lizzi,” said Stuart Brown. “We knew what was most important to our client and we went to work to assemble a deal team that included experts in every category germane to the acquisition to bring the transaction to a successful close for them.”
“Any M&A transaction requires a strong quarterback to assemble all the various players,” said John Poppe, co-founding partner of MidCap Advisors, which served as exclusive financial advisor to CFI in the transaction. “Especially in the lower middle market, highly customized solutions are needed. You want to bring in the outside experts with the right specific background tailored to all the moving parts of the transaction. Large law firms, whether representing buyers or sellers, tend to handle all aspects of M&A transactions in house, with a team comprised primarily of the most junior attorney staff, so the clients tend to receive very generalized counsel. The bespoke solution BMK created for CFI in this case, and in many others, was optimized to perform well because its only interest was to assemble the best-in-class advisors. Period.”
The fact that seasoned M&A attorneys at smaller law firms tend to have close relationships, characterized by regular communication with their clients, makes a vital difference in determining the need for subject matter experts when selling a business in part or in whole. As Keith E. Gilman, managing partner at intellectual property law firm Lerner, David, Littenberg, Krumholz & Mentlik LLP and an advisor to CFI said, ”Many attorneys do not even realize there can be significant intellectual property at stake in manufacturing-related transactions like CFI. Stuart Brown knew this client’s business intimately and brought us in early to protect CFI’s IP interests. Oftentimes, the IP in transactions like this one gets overlooked, placing the client at a serious disadvantage in negotiations.”
Not only is it important that the lead counsel for an M&A transaction identifies and recruits the appropriate experts in each area, but the lead counsel also must create a climate where all the players interact effectively. “It’s really important that an M&A team comprised of many advisors work well together,” said Jordan Amin, partner, tax services at EisnerAmper, accounting advisor to the CFI transaction. “The team needs to be comfortable working together, relying on each other’s expertise and challenging each other to get the best results for the client. In this case, there were complicated tax issues to be communicated to other members of the team and carefully navigated. We worked with BMK to walk the seller through various tax structuring options to arrive at the most palatable solution for the client.”
Smaller law firms are proving that having seasoned senior level attorneys leading and executing industry-leading M&A transactions provides a benefit that large law firms cannot match despite their strength in numbers. Smaller firms with a robust transactional practice can assemble the best-in-class subject matter experts necessary to execute the transaction in the most cost-effective and efficient manner.
As Stuart Brown said, “Rather than speaking about how well we do what we do in the M&A arena when serving as lead transaction counsel, I’d rather have my client at CFI tell you. Here’s an email message we received following the CFI closing from President & CEO Bill Lizzi: ‘We’ve used BMK Law for more than 20 years to support our ongoing business. In 2022, BMK provided expert legal advice, support and coordination for the sale of our business, from the start of the process until final payments were made. Their team is customer focused, professional, knowledgeable, reliable and responsive. They also have a network of experts that can be tapped into for additional specific subject matter knowledge if necessary. We highly recommend their services.’”
In addition to MidCap Advisors, Lerner David and EisnerAmper, BMK was joined by the following parties in executing the CFI acquisition, which was one of the most the consequential deals in the North American cosmetics, fragrance and personal care space for 2022: Brian Satz of the Satz Law Group LLC (transaction counsel); Wanda Chin Monahan of Wanda Chin Monahan LLC (environmental counsel); Christine Gottesman (benefits counsel) and Niviritha Ketty (employment counsel) of Nukk-Freeman & Cerra, P.C.; and Jeffrey Shapiro of Lowenstein Sandler (HSR Compliance).
In addition to Stuart Brown as lead transaction counsel, the BMK team for CFI included Keith Marlowe (real estate counsel), Jay Soled (tax counsel) and Justin Escher Alpert (transaction counsel).
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