For those who don’t follow mergers and acquisitions or the business of travel, they may not know Booking Holdings. But most people—the millions who have reserved a hotel or restaurant reservation online in recent years—know its companies and products, including its primary brands: Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com, and OpenTable. Booking Holdings, which started as priceline.com in 1997, has become an approximately $100 billion travel and reservation industry leader, growing swiftly through acquisitions of key companies at the right times.
Around the time Booking Holdings was completing its acquisition of KAYAK for $1.8 billion in 2013, Stephen Sonne arrived. As senior vice president and associate general counsel, Sonne came to Booking Holdings with varied experience in the legal field, particularly when it came to M&A work. He had lived through the boom-and-bust cycle of the early Silicon Valley years, which gave him a distinct vantage point on both business and law, and he had grown as an attorney with his hand in an interesting array of deals and other legal work, becoming a trusted advisor along the way.
“Most tech start-ups and even many smaller tech companies that were publicly traded tended not to have significant legal teams,” Sonne explains. “So, for most of my clients, I’d be in board meetings or with management, primarily to give a legal point of view but also involved in business discussions, witnessing the decision-making process and seeing the goals and obstacles facing my clients. If they needed to do a venture-capital financing deal or buy a company, I was still the person doing it. I couldn’t hand it off to my M&A colleague or my securities colleague. So, I became an M&A and securities lawyer.”
He loved the work, and it also gave him an understanding of what both sides of the M&A table need for a deal to be successful. He now relies on his expertise to help Booking Holdings as it continues to grow through more deals, including an acquisition of OpenTable for $2.6 billion in 2014. Here, Sonne shares some key insights for younger attorneys looking to get into the dealmaking business themselves.
1) Honesty is the best policy
Sonne says some less experienced attorneys want to be sharks. But, any short-term gains earned by being deceptive aren’t worth it in the long run. “Never lie, ever,” Sonne says. “That doesn’t mean you have to reveal everything you know, but never, ever lie.”
He says this doesn’t mean that negotiators can’t change their minds on facets of a deal, but establishing a trustful relationship from the get-go will also make such pivots easier. “You can say, ‘I know I said ABC at the beginning, but as we got more information, we now think XYZ,’” he says. “As long as you were telling the truth, I think that’s OK. You will never recover in a transaction from a lie, though, because the other side will never believe anything you say.”
2) Let your reputation follow you
According to Sonne, your reputation—and that of the client you represent—matters. “Almost always, the transaction you are doing now won’t be the last one for you or your client,” Sonne says. “So, understand that how you do deals will get around. You and your client want to have a reputation of being a good acquirer. Even if acquisition conversations end up stopping, you don’t want to burn any bridges. Sometimes the right answer at the time is ‘keep working on your business, and we’ll talk again in six months.’ Sometimes that can be disappointing to the target, and they may feel misled if you overpromise up front or don’t set appropriate expectations. You may want to come back to them later, and you don’t want to have a reputation as somebody who is tricky or slippery.”
3) Have the courage to say ‘I don’t know’
Younger attorneys often want to impress folks in the room or are concerned that gaps in knowledge show weakness, Sonne says. But, he believes that attorneys should never be afraid of verifying information, getting a second opinion, or checking with an expert. “Be prepared, but don’t bluff when it comes to legal advice,” he says.
“It’s great to be smart, everybody’s smart,” Sonne adds. “But, you need to have the self-confidence to ask questions, to not feel pressure to answer if you are uncertain or need more information. Find outside counsel you trust. You should not be at all bashful about telling them ‘I don’t know what this provision means,’ for example, or ‘why is the other side obsessed with this point?’ If you’re embarrassed to ask a question, if you’re embarrassed to say, ‘I don’t understand,’ that will hurt you.”
4) Tell your acquisition target to hire experienced counsel
Sonne says that smaller companies will sometimes hire someone they know or a family member who has legal experience but not specific M&A work. He says that’s not an opportunity for acquiring attorneys to lick their chops, for it often causes problems down the line when companies don’t fully understand what they’ve agreed to.
“When representing a buyer, I always want the seller to have professional counsel that they are comfortable with,” Sonne says. “Inexperienced lawyers are often afraid to compromise, and they will fight over things they shouldn’t, over absurd things.”
5) Don’t be afraid to do the right thing
“Everyone has a different negotiation style, which is OK,” Sonne says. “But, lawyers have special ethical obligations. You may feel pressure to negotiate in a way you feel is unethical, to minimize risks or to hide information; don’t give in to that. You have to have the courage to do the right thing. You may have to stand up to the business folks and say, ‘We have to take a step back from this company,’ or ‘We can’t sign this deal until this issue is dealt with.’ That can be really hard for a junior lawyer. There’s all this pressure; you want to be the one who helped it happen, not the one who stopped the deal. But, you have to have the inner fortitude to do what’s right.”
Photo by Annie Devine