Two Dallas lawyers who recently jumped firms to expand O’Melveny & Myers’ new Dallas presence said they’re seeing creative structures and practices to speed up mergers and acquisitions in an “ultra competitive” environment.
Partners Whit Roberts and Jack Jacobsen, along with three other lawyers on their team, moved from Locke Lord LLP to help grow Los Angeles-based O’Melveny’s local office earlier this month. The all-partner team — Roberts, Jacobsen Will Becker, Jason Schumacher and Chrissy Williford Metcalf — specializes in M&A, private equity, capital markets, energy and tax.
Roberts and Jacobsen said the M&A landscape has been active recently, and they still have full pipelines of deals.
How is M&A changing with COVID? How is it affecting certain provisions, contracts or structures of deals?
Jacobsen: It’s an incredibly competitive market right now from the buyer’s standpoint. It’s clearly a seller’s market, so the buyers have to be ultra competitive to get the transactions. One of the issues is the speed to close. The buyers have to show that they can close the deal properly. And so in terms of due diligence, and financing, they need to show upfront that they can sign the deal and get it financed and closed in a short period of time.
Roberts: That’s one trend we’ve seen. There’s also an increasing use of representation and warranty insurance.
How can buyers show they can close the deal quickly?
Roberts: I’ll give you two examples. One, they will provide a diligence process that will be some in some ways streamlined, or that will accomplish the due diligence process more speedily. There are other times where financing can be arranged in ways where the private equity firm will use equity to pay the purchase price and then follow up by refinancing it with debt, so that the debt finance ends up not being a pacing item to get the deal close.
Jacobsen: Whit mentioned the use of rep and warranty policies that streamline the process in terms of negotiating contracts. There’ are less terms of the agreement because there’s potentially less risk to the seller, in terms of exposure or indemnification on the agreement.
What have the types of clients you work with looked like?
Roberts: What I would speak to is the ongoing diversity of the Dallas business community. I look to the ongoing business community that continues to grow and attract more folks to the community and grow resources within itself. So you talk about technology, technology-enabled services, and hospitality and health care.
Jacobsen: I do have a number of healthcare deals. I think it continues to be active, the healthcare industry, as does the tech sector. Energy is an industry that we are going to continue to grow in 2022, in this office.