This session from Transaction Advisors M&A Conference at the University of Chicago considered approaches for engaging the Board in an organization's inorganic strategy, including prospect development, techniques for improving target receptivity, and methods for pursuing an unwilling target.
Consideration was given to the appropriate lines of authority between the Board and management, what level of 'efforts' to close should be agreed, and when Directors may be permitted to withdraw their support for a transaction.
Moderator William Kucera, Co-Chair of Mayer Brown's M&A practice in the Americas, began the session by emphasizing director’s duties and the reality that just one deal “that goes sideways” could impact a company going forward.
Frank Jaehnert, former President & CEO of Brady Corporation added that in general the more material the transaction is to a company and the less experienced the management is at M&A, the more the board should get involved.
Regardless, Sergio Letelier, Vice President and Deputy General Counsel - Corporate, Securities and M&A at Hewlett Packard Enterprise, further emphasized that boards should regularly be aware of deals in the works (a pipeline review), and regularly review the performance of completed transactions, a sentiment shared by Doug Jackson, Managing Director and Co-Head of U.S. M&A, Greenhill & Co.
Among other topics, the panel considered informal ways in which management might get board members apprised of potential deals, as well as the use of transaction committees and other board subcommittees.
Jackson added that he is seeing more use of transaction subcommittees than historically, especially when a CEO is not that experienced in M&As or when M&A has not been part of the history of the company.
Jaehnert cited that finance committees may be a standing subcommittee of a board, as well as using committees of the board to tackle well-defined issues related to the potential M&A action, such as environment, taxation or liability.
The subject of hostile buy-sell deals was also discussed, with the panel’s consensus that, as Letelier said, “more and more, companies would not consider a real hostile approach; … the risk-reward ratio is not high.”
In concluding the panel emphasized that a board must be involved in developing a company’s M&A strategy, although Jaehnert stressed that “management must set the strategy.”
By, William Kucera, Esq., Co-Chair of Mayer Brown's M&A practice in the Americas; Frank Jaehnert, former President & CEO of Brady Corporation (NYSE: BRC); Sergio Letelier, Esq., Vice President and Deputy General Counsel - Corporate, Securities and M&A at Hewlett Packard Enterprise; and Douglas Jackson, Managing Director and Co-Head of U.S. M&A for Greenhill & Co.
Content originally from Transaction Advisors
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