A Tale of (more than) Two Law Firms

In M&A deals, the buyer and the selling company both have legal counsel representing their respective interests, but what about the shareholders? During the deal, the selling company and the shareholders may seem like one and the same, but after closing the selling company is subsumed by the buyer. Furthermore, while some shareholders (namely, investors) fight for merger proceeds, management of the selling company may have conflicting interests, such as the salaries and incentive plans set up by the buyer as their new employer. SRS’ Paul Koenig contributed an article to peHub this week about a trend we’ve seen toward having a separate firm that represents the interests of a stockholder or group of stockholders.

In his article, Paul points out that the shareholder representative, in particular, may need independent counsel. The job, often requiring significant responsibility and potential liability, simply cannot be taken lightly. And the shareholder representative should recognize that seller’s counsel is there to represent the interests of their client, not the representative.

SRS recommends that anyone considering taking on the role of shareholder rep ensure that they are first represented by separate counsel in connection with the negotiations, and that the company is responsible for payment of the related legal expenses regardless of whether they eventually agree to accept the position.