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How M&A Deals Are Like Dating

Tags: M&A

As a business owner, the concept of buying or selling a company can seem complicated and unfamiliar. When clients come to me feeling apprehensive, I let them know that in a lot of ways, these transactions are similar to something we’ve all been through: the process of dating and building a relationship.

Finding a Match: A Suitable Partner

In dating, individuals look for compatibility in personality, long-term goals, and values before committing. In mergers and acquisitions (M&A), business owners search for suitable partners that align with their strategic goals. While the seller is looking for a purchase price that meets their expectations, the buyer is seeking a business that has prospects for sustainable growth and synergies with their current model.

Dating: Due Diligence

When you’re dating, it is never too early to ask your best friend for their opinion. Your attorney serves this purpose during the M&A process. There may be red flags that you don’t notice, but are recognized by an outsider.

The next step in dating is the “getting to know you” phase, where both partners learn about each other’s habits, quirks, and background. It’s about figuring out if there are any issues before taking things to the next level. This is similar to companies conducting due diligence to evaluate the financials, risks, and benefits of the other party. They want to ensure the partnership is a good fit.

Getting Serious: Negotiation

Then you enter into negotiation. Terms of the deal are negotiated, including how control will be shared, financial arrangements, and how the two entities will integrate. At this point in your relationship, you are going “steady.” Here, you negotiate boundaries and set expectations about how you want the partnership to function—whether it’s about communication styles, future plans, or shared responsibilities as you begin to solidify your commitment to one another.

Engagement: A Non-Binding Agreement

Once the terms of an M&A deal are agreed upon, the buyer and seller typically enter into a non-binding agreement called by a number of different names (letter of intent (LOI), memorandum of understanding (MOU), indication of interest (IOI), etc.) where the basic terms of agreement are memorialized. This is the engagement. As the parties continue to analyze the prospective business transaction, the attorneys for both sides will prepare and negotiate the deal documents necessary to consummate the transaction.

Marriage: Closing

The M&A team typically includes attorneys, accountants, and financial advisors just as a florist, caterer, and photographer would coordinate a wedding ceremony. Once the transaction documents are negotiated and agreed upon, the closing of the transaction occurs, marking the start of a formal partnership. Think of this like getting married, where both parties decide to fully commit to the relationship and take steps to integrate their lives.

A New Life: Integration

After the deal, companies must integrate operations, cultures, and people. This mirrors the adjustment period in a relationship where both individuals start merging aspects of their lives, like living arrangements or handling finances. The goal here is to enjoy the honeymoon period where both parties realize the benefit of their bargain. Your professional advisors play an integral role along the way in making sure the marriage remains harmonious.

For more input and guidance on M&A transactions, reach out to Vincent Costa at 631-738-9100.

Christine Malafi quoted in Long Island Business News on new employee screening

Posted: November 4th, 2024

By Ed Moltzen, Contributing Writer, LIBN

Pressure to bring new employees on board in a tight labor market might lead a business to take shortcuts in the vetting process. However, that can create even bigger problems: tarred reputation, money loss, or legal liability if the wrong employee gets in the door.

Some Long Island legal experts say that while they understand the imperative to hire quickly, vetting is often needed to protect all parties—customers, employees and the business itself.

In its most recent report for the Long Island region, the New York State Department of Labor estimated that unemployment here has hovered at around 3.8 percent—well below the national levels. In critical sectors such as healthcare, education and construction, the pressure to hire has increased against the necessity of vetting.

“It has to be part of your normal onboarding process to decide as to whether a specific position warrants what type of criminal or other background check,” said Christine Malafi, senior partner at Campolo, Middleton & McCormick in Ronkonkoma.

Malafi said that thorough background checks and robust HR procedures are essential to prevent potential liabilities. She stresses that businesses, especially those handling sensitive information, must have clear, consistent hiring and onboarding practices.

This helps ensure all employees are vetted appropriately for their roles and minimizes risks related to safety and security.

In one recent case, Malafi said a company hired an employee without conducting a full background check, only to find out a week later, after she visited clients’ homes, that the new member of the team actually had prior convictions for identity theft.

“They literally had to shut their computer system off, shut their bank accounts down, everything down, because she went into a place she shouldn’t have been in their computer,” Malafi said.

Malafi offers this advice to employers: “Preparation is key to avoiding potentially huge liabilities and losses down the road. In law, we say preparation, preparation, preparation.”

Read the full article here.

New York Employers Subject to Prenatal Leave Law §196-b

Posted: October 22nd, 2024

By: Christine Malafi, Esq. email

New York State is once again at the forefront of new progressive labor laws supporting women’s productive rights. Revisions to Section 196-b of the New York Labor Law were recently signed into law, mandating that as of Jan. 1, 2025, all employers are required to provide employees with up to 20 hours of paid prenatal personal leave each year.

“Paid Prenatal Personal Leave” means “leave taken for the health care services received by an employee during their pregnancy, . . .including physical examinations, medical procedures, monitoring and testing, and discussions with a health care provider related to the pregnancy.”¹

All employees may take up to 20 hours of paid personal leave for prenatal medical care received in any 52-week calendar period. This leave may be taken in hourly increments, paid at the employee’s regular pay rate. Unused prenatal personal leave is not required to be paid upon an employee’s termination.

All employers within the state of New York, regardless of the size of the business or number of employees, must provide this leave. This applies even to those small employers required only to provide unpaid sick leave. Employers are also required to reinstate employees to their original position or an equivalent one upon their return from prenatal personal leave.

Employers are prohibited from requiring employee disclosure of confidential information to substantiate their request for paid prenatal personal leave. Employers may not request medical verification of any kind relative to this leave unless the leave is used for three or more consecutive days.² Retaliating against employees who take prenatal leave is also prohibited.

As with any legal provisions, employers should stay informed about employee rights and employer responsibilities under the laws to ensure compliance and promote a healthy, productive work environment. We expect that the New York Department of Labor will publish regulations or FAQs to clarify our substantive concerns in the coming months.

For more guidance, please contact us at 631-738-9100.

Related Laws and Benefits

Section 196-b is separate and apart from existing state laws that protect the other rights of employees related to pregnancy. For example:

• New York Paid Sick Leave Law ³
• New York City Paid Safe and Sick Time Law ⁴
• Right of Nursing Employees to Express Breast Milk in the Workplace⁵
• Maternity Leave under NYS Paid Family Leave Law⁶
• Paternity Leave under NYS Paid Family Leave Law⁷
• Federal Family and Medical Leave Act (FMLA)⁸

N.Y. Labor Law § 196-b (2020).
N.Y. Comp. Codes, R. & Regs. tit. 12, § 196-1.3.
N.Y. Comp. Codes, R. & Regs. tit. 12, § 196-1.3.
N.Y. Comp. Codes R. & Regs. tit. 22, § 24.6, 22 NY ADC 24.6.
N.Y. Labor Law § 206-c (McKinney).
N.Y. Comp. Codes, R. & Regs. tit. 12, § 380.
N.Y. Comp. Codes, R. & Regs. tit. 12, § 380.
29 U.S.C.A. § 2615.

Legal Brief: Fall Round Up – Upcoming Casino Gala, Latest Insights and More!

Posted: October 21st, 2024

Richard DeMaio Named Leadership in Law Award Honoree

Posted: October 8th, 2024

Campolo, Middleton & McCormick, LLP is pleased to announce Richard DeMaio has been selected by Long Island Business News to receive a 2024 Leadership in Law Award. This award recognizes dedicated individuals whose leadership, both in the legal profession and in the community, has had a positive impact on Long Island. Recipients of these awards demonstrate outstanding achievements, involvement in their profession and support of the community. DeMaio will accept his award at the Leadership in Law Awards Gala at the Crest Hollow Country Club on Nov. 12.

At CMM, DeMaio focuses on litigation in varied subject matter including contract issues, business disputes, environmental matters, and municipal matters in state and federal court. His municipal work includes Article 78 proceedings, zoning/land use matters, and defending municipalities. He also focuses on commercial landlord-tenant cases and a variety of appeals.

DeMaio has been actively involved in the Suffolk County Bar Association (SCBA). In addition to his new role as a Director, DeMaio currently serves as Treasurer and an officer of the Suffolk Academy of Law, the educational arm of the SCBA.

Employers Beware of Liability Stemming from the Happy Hour

Posted: October 3rd, 2024

By: Christine Malafi, Esq. email

Recently, a New York appellate court found an employer liable for an employee’s injuries that arose from an off-site “happy hour” event.¹

The injured employee,² Bruce A. Matter, was an account executive for Google. He was struck by two motorized bicycles while crossing a street to get to a bus stop to go home after an “invitation-only”³ event, a “SADA & Google Cloud—Happy Hour,” at a local biergarten for the “Google Cloud NYC team.”

At the trial, Google’s representative explained that the purpose of such events is to develop and maintain business relationships between Google’s sales team and business partners, which, in turn, allows a better understanding of different strategies that may be pursued for sales purposes.

The Court reasoned that in order for an injury to be compensable under the New York Workers’ Compensation Law, the injury “must arise both out of and in the course of employment,” which means that injuries sustained during work must be related to the performance of one’s job duties. While “[g]enerally, accidents that occur outside of work hours and in public areas away from the workplace are not compensable,” if “there is a causal nexus between the accident and employment,” those injuries will be compensable under the law.

The Court found that a link between the accident and Matter’s employment was supported by substantial evidence, acknowledging the informal nature of the happy hour, but finding that Google clearly derived a benefit from its employee’s participation in the event by the development and maintenance of business relationships that generated increased sales and revenue. The Court also found that the employee’s attendance at the happy hour “altered the usual geographical or temporal scheme of travel, thereby altering the risks to which [he was] usually exposed.”

Employers should be aware that any events (including happy hours) that benefit them, where employees are encouraged to attend, may lead to not only workers’ compensation claims by injured employees, but also may lead to claims by third parties that have been injured by employees attending such events.

For labor and employment guidance, call us at 631-738-9100.

Matter v. Google Inc., No. CV-23-0719, 2024 N.Y. App. Div. LEXIS 4814 (3d Dept. 2024). ↩︎
The injuries were reported to be “traumatic brain injury, was diagnosed with vertigo, and injured in his left shoulder, left knee, right elbow, left lung, four ribs, and both eyes.” ↩︎
Matter, 2024 N.Y. App. Div. LEXIS 4814, at *1. ↩︎

Malafi Presents at CLE: The Future of Non-Compete Agreements in New York

Posted: October 1st, 2024

Event Date: October 16th, 2024

This program will examine recent government attempts to ban most types of non-compete agreements, including the Federal Trade Commission’s recently stricken Non-Compete Clause Rule (“Final Rule”) and potential future New York State legislation. Join CMM Senior Partner Christine Malafi to discuss the challenges and objections made to the ban, potential exceptions to the ban, and alternatives to non-compete agreements.

Details

Date: Wednesday, October 16, 2024

Time: 12 PM – 1 PM

Where: Zoom

The program will provide you with 1.0 CLE credits in Professional Practice.

Register Now

6 CMM Attorneys Recognized as 2024 Super Lawyers^® and 4 Named Rising Stars

Posted: September 25th, 2024

Campolo, Middleton & McCormick, LLP is proud to announce that ten attorneys at the firm, in multiple practice areas, have been named to the 2024 Super Lawyers® list, four of them as a Rising Star. The CMM attorneys recognized this year, in practice areas including Business and Corporate, Personal Injury, Real Estate, Business Litigation, Mergers & Acquisitions, Construction Litigation, Employment Litigation, and Appeals, are:

The rigorous Super Lawyers selection process is based on peer evaluations, independent research, and professional achievement in legal practice. The Rising Stars recognition denotes superior professional achievement by attorneys who have been in practice for under 10 years or are under age 40. No more than 2.5 percent of lawyers in New York State are named to the Rising Stars list.

Learn more about CMM’s outstanding legal professionals here.

Campolo, Middleton & McCormick Closes F-Reorganization Deal for Food Service Company

Posted: September 9th, 2024

Campolo, Middleton & McCormick (CMM) has successfully closed another M&A transaction, this time for a long-standing client. Our journey with this client began over a decade ago when we assisted them in purchasing a company that provides nutritional meals to schools, daycare centers, and summer camps across New York and the surrounding areas.

Throughout this period, we have remained fully engaged with the client, supporting the purchase and subsequent growth of their business. When the client recently decided to sell, we were ready to step in and handle the sale.

The deal involved a stock sale to a private equity firm with established investments in the food service space. Additionally, the deal included an F-reorganization; a tax-free corporate restructuring that alters the corporation’s identity or form.

The deal team led by Vincent Costa, was thrilled to guide the client through every stage of the process, from the initial steps to the successful closing.

The client praised CMM’s dedication, stating, “I really appreciate all the hard work and flexibility. Excellent job in pushing this through!”

Following the sale, our client will continue to oversee operations, ensuring a smooth transition.

This transaction highlights CMM’s experience in M&A transactions and our commitment to our clients. For more information about our mergers and acquisitions practice, please contact us at 631-738-9100.