De-mystify a Merger or Acquisition
Is a merger or acquisition in your business’ future? What can you do to prepare your company to be purchased or sold? While the process can be complex, mergers and acquisitions are a very real—and positive—part of the life cycle of the growth for many successful businesses.
A sale or purchase may start over a casual lunch conversation or after months of research by a firm seeking to broaden its market reach. The key is planning and building the right team to assist with legal and human resources aspects of what can be a complicated pathway to growth. Once the leadership of the respective entities identifies their desired results of the transaction, involve professionals in the contract negotiations.
“A cobbler sticks to his trade, and most business owners are good at their industry,” says Adam Slipakoff, a Cobb-based attorney who specializes in mergers and acquisitions. “That being said, it’s important for business owners to bring in attorneys and accountants in the process, because they can be excellent resources to help structure and formalize the transaction. I advise business owners to bring professionals in early to make the merger or acquisition smoother.”
Experts also recommend building a strong communications strategy directed toward employees—many businesses’ chief asset—from the onset of the negotiations. “It’s much better for employees to hear about possible upcoming changes from their employer than from the media or the grapevine,” says Lisa Hughes, vice president of human resources for Nobis Works of Marietta and an instructor in Kennesaw State University’s College of Countinuing and Professional Education. “Get ahead of the curve to retain valuable employees because they are an important part of the business—whether they’re concerned about further employment, new leadership or continuation of benefits, it’s crucial to keep them informed as much as you can.”
In two recent business transactions involving Cobb-based businesses, the proper planning and consideration for each firm’s stakeholders—customers, employees and shareholders—accomplished the transactions with minimal interruption of business processes, customer service and staffing. By involving legal and human resource expertise from the beginning of the process, executive leadership was able to successfully move their companies into the next level of growth.
Broadening a Vision Through Acquisition
As owner of the largest Fixed-Base Operator (FBO) in the Southeast, Thomas Huff realized that his vision for Cobb County’s McCollum Field in Kennesaw had reached a plateau. “When we began developing Atlanta Executive Jet Center almost a decade and a half ago at McCollum Field, there was only one public bathroom for the entire airport,” he says. “Now, $42 million and 14 years later, there’s 500,000 square feet of hangar space, 65,000 square feet of office space and a restaurant. And we plan to have a U.S. Customs operation here by the middle of 2015. We’ve worked hard and brought direction and vision to the airport with excellent encouragement from the county. I realized that I had taken the vision for the airport as far as it could go.”
Enter Hawthorne Global Aviation Services, a national FBO looking to expand into the Southeast. After nearly a year of negotiations and transition, Hawthorne Global finalized an asset purchase acquisition of portions of Atlanta Executive Jet Center last summer. “We kept some hangar space that Hawthorne manages for us, the aircraft charter business and the restaurant,” Huff says. “We were able to sell the part of the business that Hawthorne was interested in and kept the parts of the business that we wanted to focus on. It was an excellent transition for everyone concerned.”
Huff attributes the success of the acquisition to planning and vision, then involving the attorneys to execute the plan that he and the leadership at Hawthorne conceived. “It’s wise for both sides to involve attorneys to ensure that there are no misunderstandings. Once we had our plan in place, the attorneys formalized it,” he says. “Also, it was important for us to consider our employees and our customers as we moved forward.” Representatives from Hawthorne came to Cobb to manage the transition of employees. “We had a great team in place and Hawthorne did too, so all of them kept their jobs,” Huff continues. “Some went with me in the new business and the others went with Hawthorne. It worked out really well.”
Hawthorne Atlanta’s General Manager Tom Auten took over management of the newly opened FBO late last summer, having spent nearly 50 years in the aviation business, most recently as general manager of the FBO at Atlanta’s Hartsfield-Jackson Atlanta International Airport. “The acquisition is Hawthorne’s foray into the metro Atlanta market,” he says. The firm now has FBOs in five markets; in addition to Atlanta, locations in New Orleans, Chicago, New York and Eau Claire, Wisconsin, provide a network of aviation services.”
“Our goal is to honor the commitments to the people who were formerly doing business with Atlanta Executive Jet Center and to grow our business,” Auten adds. “We’ve been standardizing policy and processes as we move forward and have also offered extra training for employees. We’ve already upgraded and purchased new equipment as we continue to improve this part of Hawthorne’s market plan, making it an even stronger company.”
Strength in ‘A Merger of Equals’
For the leadership of two north Atlanta financial institutions, a merger of equals made perfect sense from a number of aspects. Both Midtown Bank & Trust Company and First Landmark Bank operated as community banks; Midtown had branches in Atlanta and Sandy Springs, and First Landmark served customers in Cobb. “We blended our management teams and used the best of both of our institutions to create something that’s even greater,” says Terrence DeWitt, former First Landmark president who now serves as the new entity’s executive vice president and chief financial officer.
Talks began in the summer of 2013, with DeWitt and Midtown Bank’s then-President and CEO Stanley Kryder meeting to discuss a possible merger. “The more we talked the more we realized that the sum of the parts was worth much more if we combined the businesses,” Kryder says. “Both entities have strong community roots and are well capitalized with clean balance sheets. A light bulb went on for both of us how similar we were and what the potential could be by bringing our specific lines of business together.”
The process included extensive work by attorneys for both entities with executive leadership involved from the outset. Separate counsel, who first fashioned a document called a merger proxy that was distributed to all shareholders, represented each bank. Once shareholders approved the merger proxy, attorneys also worked as liaisons with regulatory agencies, the Federal Deposit Insurance Corporation (FDIC) and the Georgia Department of Banking and Finance to navigate the complex compliance issues related to financial institutions.
The merger, announced last spring, resulted in each of the banks retaining individual branding under the umbrella of First Landmark Bank, which was named the acquiring institution and surviving charter. “There was really not a compelling reason to rebrand the institutions because of their already-strong presence in their own communities,” Kryder says. “Each is operating as a division of First Landmark Bank, but we agreed early on in the process that the local community connections for our customers and shareholders were very important in each of the three markets.”
Once again, consideration for employees was an important part of the process. “There was not a great deal of overlap in our business lines,” DeWitt says. “No customer-facing staff changed, and we were able to enhance our services and achieve something unique while using the talents that were available to maintain our community presence and confidence.”
In all, mergers and acquisitions can be challenging. No matter the size of your company, reaching out to legal and human resources experts can help assure that the process considers all parties, stakeholders and customers as a new entity is born.
