Beyond The Deal: The General Counsel's Role(s) In M&A Integration

The ink on the deal may be dry and outside counsel may be celebrating with steak and champagne, but for the General Counsel and team, the integration work has just begun. The notion that a lawyers’ work ends at the close of the deal is a common misconception in the legal and business communities; however, seasoned General Counsels and in-house legal teams know that they play a critical role throughout the entire M&A process – including integration. 

From our direct experience with merger integrations and in discussions with General Counsels from companies who have successfully completed deals, Metre22 has gleaned several insights into the roles acquiring company’s General Counsel needs to play to ensure the transaction is an overall success. These roles demonstrate the leadership required to not only successfully close the deal, but to execute the post-close integration and – most critically – deliver the value promised in the transaction. Here’s our take on the four key roles a General Counsel must consider:

  • Orchestrator.  The General Counsel oversees outside counsel (if utilized) and ensures adequate due diligence, clearance of requisite regulatory hurdles (for more on this topic, please see How Much Pre-Close Planning is Appropriate), and that the deal ultimately closes. During this pre-close period, the General Counsel is instrumental in coordinating everything from the strategy, to securing regulatory and anti-trust approvals, to educating their organization on allowable pre-close information sharing. Even if they rely on outside counsel – say for instance to take the lead in discussions with the FTC or DOJ – successful General Counsels never relinquish their orchestrator role. Equally important, they must also help ensure all the post-close mechanics outlined in the purchase or merger agreement are understood by the broader organization. This can include anything from post-closing regulatory notifications and approvals, to managing post-close covenants, earn outs, integrating in-flight Request for Proposals (RFPs), creating Transition Service Agreements (TSAs), and indemnity claims. As the transition from transaction to integration begins, the General Counsel is instrumental in ensuring the information gathered during due diligence is shared with the integration leader(s) and members of the integration management office so they can begin planning efforts in an informed manner. Thus, ongoing communication and collaboration with the individuals serving as integration leads are vital. Because the General Counsel has a front-row seat well before closing, they are central to ensuring this knowledge is transferred after the close to support an effective integration.
  • Advisor.  General Counsels generally are no strangers to collaborating and advising other business units in their company.  They translate their interpretation and understanding of complex legal and business issues into terms a non-lawyer can understand.  Following a merger or acquisition, this skill becomes even more important due to the simple fact that certain questions only arise in the post-close integration phase. For example, the acquired company’s policies and procedures may differ from yours and HR will seek support.  IT may ask to re-negotiate software and hardware contracts of the acquired company’s technology assets. Finance may ask to negotiate the terms of an acquired real estate or insurance agreement coming to term after close and business operations may request research into local regulations if the acquired company operated in a different market, or request support in drafting communications to new customers making them aware of the transaction. There may be the need for education of acquired leaders on topics like compliance and the Foreign Corrupt Practices Act. This list of ‘ad-hoc’ requests seemingly does not end, and the time required is highly variable. After all, among the many hats that a General Counsel wears, first and foremost is serving as a subject-matter expert for business operations knowledge – or as one General Counsel we spoke with phrased it, “our role during an integration is to provide business advice through a legal lens.”
  • Leader.  Closer to their own office, the General Counsel also may be charged with overseeing the integration of the acquired company’s legal team. It is imperative to create a shared and welcome environment for new and legacy team members alike. If your company is not a serial acquirer, you and your team may have little experience in designing and integrating an organizational structure.  Opening candid communication channels, defining new roles and responsibilities, and setting expectations from the offset will go a long way in ensuring a smooth integration of new team members. Although there is a need to move quickly, several General Counsels have mentioned that the integration of legal departments is the ultimate opportunity to ensure the right talent decisions are being made. Making those decisions based on capabilities as opposed to the need to appear fair by choosing equal numbers of staff from each merging organization is sometimes difficult, but is necessary.
  • Strategist.  Arguably the most important role of the General Counsel after the transaction is enabling the business to achieve its vision and strategy. In our experience, we have seen General Counsel and legal teams first hand assist in shaping future corporate strategy. For example, during one integration, the General Counsel provided the business with a variety of appropriate avenues for legal entity structures for the newly acquired assets to align cohesively with existing assets.  This enabled the business to better deploy resources and execute the corporate strategy. Had the General Counsel not been involved in the cross-functional strategy team, the business may not have been able to logically integrate the newly acquired assets and execute the overall strategy. Similarly, one General Counsel we spoke with was critical to the future integrated company’s service offering because it inherently involved both business and legal expertise. The role the General Counsel played was vital – not only did they draft the legal terms, but they also assisted in the term negotiations with outside parties on behalf of the business.

Outside of all the hat wearing and roles that the transaction lifecycle demands, and the unique challenges that M&A presents – General Counsels still have an important day job requiring them to interface with the most critical areas of the business and focus on their day to day responsibilities.

General Counsels have told us that their role in the integration of two companies is some of the most rewarding (and challenging) work they have done. Their best advice? Get the timing right and know ahead of time where expertise, leadership, and influence will be needed.  Choosing the right partner and leveraging the experience of others for your integration will aid in the execution and achieve the ultimate goal of realizing the deal’s intended value. For additional insights in what traits to consider for an integration lead role, visit Advice from Past M&A Execs.