The Perfect M&A Playbook

Jaron Brown shares the five steps of his football-inspired approach to transactional deals for rolled-aluminum products manufacturer Novelis Inc.

Jaron Brown

The transition from private practice to in-house legal work brings with it many changes. For Jaron Brown, one of the biggest was in his approach to mergers and acquisitions.

By the time he became assistant general counsel at Novelis Inc., a manufacturer of rolled-aluminum products, he had eleven years of experience as a transactional lawyer. As an outside counsel, his role was clearly defined: he was brought in at a certain point in a transaction to negotiate the remaining open terms, draft the definitive agreements, and steer it toward a successful closing. When he went in-house, though, his focus changed from negotiating and drafting to strategic planning, execution, and integration.

He compares a good M&A deal team to a well-organized, well-lead football team, with the in-house legal department acting as the quarterback. “It’s our responsibility as inside counsel to keep everyone on the deal team mindful of the common goal and let them know what their roles are,” he says.

Outside advisors, including accountants and external legal counsel, act as the wide receivers, running backs, and kickers—each with a specialty that contributes to reaching the goal. “We bring them in at the right time to make the right play—to make sure we are successful and do not commit a turnover,” Brown says. “This is all in an effort to reach our common goal of marching down the field and scoring a touchdown.”

And, like the plays in a football game, the particulars of each M&A transaction vary depending on a number of factors. Here, Brown outlines the steps Novelis takes and the considerations it bears in mind when completing an acquisition.

1) Plan the Transaction

Brown plans every deal around the goal of supporting the business. During the planning phase, his legal department works with executives to determine the best strategies to achieve the company’s aims. “We don’t just want to say yes or no,” Brown says. “We want to give our executives value-creating options on how to move forward. We need to provide solutions and alternatives that could meet their objectives.”

The legal team brainstorms both potential solutions and potential issues. For example, if Novelis is planning to acquire a manufacturing company whose operations might pose meaningful environmental risks, the legal team will identify the potential hazards and lay out the steps needed to deal with them adequately and permit the deal to move forward. “You prepare for everything you know,” Browns says. “The biggest challenge is the unknown.”

2) Organize a Team

Once the legal team has structured the deal, it organizes a deal team by choosing outside and in-house experts for each of the issues it has identified. If Novelis has to secure certain governmental approvals, for example, the deal team includes specialists in that field. For acquisitions that involve substantial intellectual property issues, the team includes intellectual property experts. And so on.

3) Define the Roles

To minimize overlap or miscommunication, each team member’s role and tasks are clearly defined based on the issues Brown’s team has found in the planning stage. In the case of potential environmental hazards at a manufacturing facility Novelis is considering acquiring, the environmental experts are tasked with performing assessments to determine, among other things, whether soil is contaminated and to recommend an effective and efficient remediation plan.

Defining roles is particularly important for company executives, for whom M&A transactions are but one small aspect of their jobs. “One thing that outside lawyers don’t appreciate is that our executives have day jobs,” Brown says. “Their time is limited, so we want to use them in the most effective and efficient way to get the transaction completed.”

4) Execute the Deal

Throughout the execution phase, Brown and his team hold consistent meetings to keep everyone moving toward the goal of signing and closing the deal. “Transaction lawyers, the way I was trained, we’re good at project management,” Brown says. “We’re good at looking at accomplishing a goal in a linear way and identifying the specific steps that need to be taken in a specific order to get the deal done.”

As the deal team completes its tasks, including due diligence, the legal team might use the results of its due-diligence findings to negotiate certain terms of the transaction in favor of Novelis in order to mitigate the risks discovered. For example, if Novelis’s environmental experts do find contaminated soil at a target facility, the legal team might mitigate the risk by asking the seller to clean up the contamination before closing or, if the cleanup is significant or will take a significant amount of time, reimburse Novelis for the cost of remediating the site after the closing. If the contamination is serious enough, Novelis might ask for a reduction in the purchase price or cancel the deal altogether.

5) Integrate the Acquisition

After closing the deal, the legal team works with departments across the organization to integrate the acquired assets and employees. No matter how carefully the legal team prepares for an M&A transaction, plans often change throughout the process, and the impact of these changes can continue even after the deal is closed. Novelis’s executives might want to spend the first year after an acquisition expanding a newly acquired facility, but in the event of environmental contamination, they might instead spend the first year remediating the site. “It could have rippling affects for the transaction, depending on how significant it is,” Brown says.