Resource management main challenge for M&A

Pensions, resource management and private equity issues dominated The Lawyer’s two-day due diligence conference for in-house lawyers, held last week.

Day one of the conference – which played host to senior M&A lawyers from Barclays, Bupa, Yum! Brands and the BG Group, among others – saw in-house lawyers single out resource management as the main challenge in an M&A transaction.

“You have to work with a team consisting of people from all aspects of management to allocate resources effectively – not just lawyers,” said Corus general counsel Helen Matheson, who led her legal team through an acquisition by India’s Tata Group in April this year.

Resource management was also identified as a hurdle by Britvic head of legal and estates Sharon Harris, and Canon Europe legal counsel Esteban Lizan Fernandez.

With pension funding matters taking a hot seat in the M&A scene, it was little surprise that the potential pitfall of pensions was emphasised by independent consultant and chairman of the conference Jeremy Evans.

His view was shared by Britvic’s Harris, who said that the subject of pensions was an inexact science, which made it difficult to manage.

Cable & Wireless M&A head Rupert Hopley highlighted the importance of defining every element of a pension scheme when dealing with M&A.

“You have to make sure you define the benefit scheme and find out who’s interpreting these figures. Get as much detail as possible,” he recommended.

The second day of the conference was dominated by private equity talk, with General Healthcare Group (GHG) general counsel Stephen Collier exploring the key differences between private equity buyers and trade buyers.

Collier, who has survived three private equity acquisitions at GHG, highlighted private equity buyers’ reliance on external firms and clever use of innovative structures to hasten the sale and cautioned lawyers about the behaviour of banks in an M&A transaction.

“Banks are motivated by the competitive tension in a private equity M&A,” he warned, adding that in-house lawyers should not feel pressured into allowing banks to dictate the speed of a transaction.

Another heavily debated private equity issue was the in-house lawyer’s possible transition from being a sell-side in-house lawyer to a buy-side one during the process of a private equity M&A.

The in-house counsel also imparted tips on handling the overall due diligence process.

Britvic’s Harris said she had sent large teams of lawyers over to acquisition target’s premises in order to send a message that they were “there to do business”.

To hear more from on this topic, listen to the October edition of The Lawyer Podcast.