1 / 25

OVERVIEW OF THE DEAL PROCESS: A ROADMAP THROUGH THE PAPER JUNGLE

OVERVIEW OF THE DEAL PROCESS: A ROADMAP THROUGH THE PAPER JUNGLE. a presentation for American Health Lawyers Association’s Transactions Seminar Nashville, April 25, 2013. Michael F. Schaff, Esq. Wilentz, Goldman & Spitzer, P.A. (732) 855-6047 mschaff@wilentz.com John R. Washlick, Esq.

malia
Download Presentation

OVERVIEW OF THE DEAL PROCESS: A ROADMAP THROUGH THE PAPER JUNGLE

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. OVERVIEW OF THE DEAL PROCESS: A ROADMAP THROUGH THE PAPER JUNGLE a presentation for American Health Lawyers Association’s Transactions Seminar Nashville, April 25, 2013 Michael F. Schaff, Esq. Wilentz, Goldman & Spitzer, P.A. (732) 855-6047 mschaff@wilentz.com John R. Washlick, Esq. Buchanan Ingersoll & Rooney PC (215) 665-3950john.washlick@bipc.com

  2. Agenda Pre-Transaction Considerations Non-Disclosure/Confidentiality/Evaluation Material Agreements Letter of Intent/Term Sheet Choosing the Appropriate Acquisition Model Valuation and FMV Due Diligence Typical Contract Provisions Hidden Risks of Boilerplate Provisions Controlling the Process and Managing Expectations Post-Closing Transaction Issues 2

  3. Pre-Transaction Considerations • Socializing the Deal • Is the deal doable? • Cultural/Mission compatibility • Demystifying ethical and religious directives (ERDs) • Locality – Politics in the Local Market • Aligning strategic goals • Synergies and expansion of clinical services • Skilled leadership and management 3

  4. Non-Disclosure/Confidentiality/Evaluation Material Agreements • Generally • Definition of Confidential Information • Nonpublic, confidential & proprietary information • Will you need to specifically stamp “Confidential”? • Does it matter who discloses it? • employees, attorneys, accountants, agents • Format of disclosure? • written, electronic. oral or tour of facilities 4

  5. Non-Disclosure/Confidentiality/Evaluation Material Agreements • Exclusions from Confidentiality, information which: • was known to the purchaser before the receipt of such information; • becomes known publicly other than through the purchaser; • is learned or developed by the purchaser independent of the seller’s information; and • which becomes known to the purchaser on a non-confidential basis from a source that is not prohibited from disclosing such information. 5

  6. Non-Disclosure/Confidentiality/Evaluation Material Agreements • Prohibited Use • limit to evaluate for the transaction • not use for any purpose • not disclose to 3rd parties • What if the purchaser is compelled by Court to disclose? • give Seller sufficient notice so can attempt to obtain a protective order • Time Period to keep Confidential • Right to obtain Temporary Restraining Order or Injunction on Breach • Venue & Choice of Law 6

  7. Non-Disclosure/Confidentiality/Evaluation Material Agreements • Return or destruction of information on termination • Non-solicitation • Employees • Customers/Facilities • Non-compete? • Standstill Provision 7

  8. Letter of Intent/Term Sheet • Generally • Sets out material Terms and schedule • Structure • Asset Sale • Stock or Membership Interest sale • Price • Fixed Price • Formula Price • Payment Terms • Collateral 8

  9. Letter of Intent/Term Sheet No-Shop Non-solicitation Publicity Closing Date Contingencies Choice of law Confidentiality Binding Provisions 9

  10. Choosing the Appropriate Acquisition Model • Typical Models • Non-Profit/Tax-Exempt Parent/Holding Co. • For-Profit Corporation • Limited Liability Company • Joint Operating Company • Joint Venture • Results of due diligence my affect ultimate model 10

  11. Valuation and FMV • Fact NOT Law • Legal Significance • Tax • Tax-Exemption • Allocation of Purchase Price • Fraud and Abuse • Stark • Anti-Kickback Statute • FMV v. Commercially Reasonable • Review -- Do Not ASSUME Accuracy 11

  12. Due Diligence • Generally • It’s all about Disclosure • Identification of Assets/Business • Tangible Assets • fixtures, furniture, equipment, cash, a/r, deposits, bank accounts, leases, real estate, inventory, supplies, software • Intangible Assets • Goodwill, name, telephone #, website, intellectual property 12

  13. Due Diligence • Identification of Liabilities • Lines of Credit, Loans • Equipment & real estate leases • Accounts Payable • Compliance Audits • Environmental Issues • Employment Issues 13

  14. Due Diligence • Identification of Agreements • Leases • Consulting and Employment • Payer/Hospital Agreements • Personal Guarantees • Assignability 14

  15. Due Diligence • Regulatory Issues • Governmental/CMS Required Approvals (CHOW, State AG/Court, State Licenses) • Anti-Trust (HSR Threshold = $70.9 Million) • Tax-Exemption • Fraud & Abuse Issues -- Existing Relationships • Space Leases – expired, unsigned, undated, etc. • Physician Employment Agreements • Other Relationships with Physicians – medical director arrangements, unwritten financial relationships • Relationships with other referral sources 15

  16. Due Diligence • Regulatory Issues • What do you do if you identify a potential problem? • Indemnification provisions – may not be practical depending upon parties involved or structure of transaction. • Self-disclose prior to closing – close over or await resolution • Reps and Warranties NOT a substitution for due diligence 16

  17. Typical Key Contract Provisions • Identification of what is being Sold • Purchase Price • Deposits • Adjustments • Earn outs • Working capital adjustments • Holdbacks/Escrow • Bulk Sale 17

  18. Typical Key Contract Provisions • Payment Terms • Collateral • Representations and Warranties • Indemnification • Caps/baskets/buckets • Time limits • Closing Conditions 18

  19. Typical Key Contract Provisions • Labor • Retention of key employees, • Layoffs/Severance, • COBRA obligations, • WARN Act • Third Party Consents • Restrictive Covenants • Survival of Representations and Warranties • ERD • Preservation of 501(c)(3) Status 19

  20. Hidden Risks of Boilerplate Provisions • Say what you mean, mean what you say! • Assignment • Compliance with Laws • Survival of Representations and Warranties • Choice of Law • Forum • Amendment 20

  21. Hidden Risks of Boilerplate Provisions • Say what you mean, mean what you say! • Waiver • Notice • Entire Agreement • Third Party Rights • Indemnification • Arbitration 21

  22. Controlling the Process and Managing Expectations • Identify Deal Team • In-House • How much do you do In-House? • Multi-Department – When do you bring in The Team? • Legal • CFO / Finance • Compliance • HR • Physicians – Integration/Quality • IT • PR • Board – Committee (Audit) 22

  23. Controlling the Process and Managing Expectations • Identify Deal Team • Outside Counsel – Multi Disciplinary • Health Care • Corporate • ERISA • Labor • Anti-Trust • Tax • Bond Counsel • Real Estate • Schedule Tasks and Responsibilities • Schedule Team Meetings for Status Updates 23

  24. Post-Closing Transaction Issues • Future Commitments • Capital Expenditures • Physician Recruitment • Service Lines – Consolidation, Termination and Charity Care • Transitional Services -- Wind-Down Seller • Enforcement of Commitments • Foundation/Successor Entity • Attorney General 24

  25. QUESTIONS? a presentation for American Health Lawyers Association’s Transactions Seminar Nashville, April 25, 2013 OVERVIEW OF THE DEAL PROCESS: A ROADMAP THROUGH THE PAPER JUNGLE Michael F. Schaff, Esq. Wilentz, Goldman & Spitzer, P.A. (732) 855-6047 mschaff@wilentz.com John R. Washlick, Esq. Buchanan Ingersoll & Rooney PC (215) 665-3950john.washlick@bipc.com

More Related