Kenneth V. Hallett, Retired Partner

Success Stories

They Grow Up So Fast!

When Quarles & Brady began working with a particular technology client over 30 years ago, the client boasted a bit less than $100 million in annual sales, but today it is a $3 billion-plus international manufacturing powerhouse. We helped take the company public, continued the relationship through some early lean years, facilitated multiple acquisitions, guided it through several securities offerings and shelf registrations, and even assisted in a transition from one general counsel to the next. We have been serving the client longer than the current board of directors and executive team. We're a keeper of institutional knowledge and corporate history and a deeply trusted advisor, as well as being very proud of our long association with the company.

Helping a Client through Its Successful IPO

Our client, a global manufacturer, was owned by a large private equity firm. That PE firm decided the client should undertake an initial public offering of its shares as part of the PE firm's exit strategy. While the PE firm owner directed that our client use the owner's New York counsel as lead for the IPO transaction, our regular interaction with and deep knowledge of the client led it to involve the Quarles & Brady team to help assure that the client's interests (and not just the owner's) were being zealously represented. We worked with our client's management team well in advance of the offering to help the client think and plan through governance, compensation, structural, and other matters to be addressed prior to and during an offering, to educate the client both on the IPO process and the compliance requirements going forward, and to develop practical and effective compliance strategies.

When the PE firm owner decided to launch the offering in earnest (on very short notice), our client was well prepared to address the many needs of the transaction and transition. The Quarles & Brady team was an integral part of the offering, working collaboratively with the client, the owners, the underwriters, and NYC and underwriters' counsel to achieve a successful IPO. That offering raised about $500 million for the client and set the stage for several subsequent follow-on offerings that have raised additional capital for the client and ultimately facilitated the PE firm's complete exit.

Of Course It Can Be Done

One of our financial institution clients was once a mutually held concern, owned by its depositors, but wanted to become a shareholder-owned institution. And it wanted to do that while simultaneously acquiring another publicly held institution—something that had never been done before. There wasn’t much or any documentation to work from on such a transaction, but our team figured out how to get it done. Along with a lot of creative thinking and persuasion of relevant regulators, the deal required a simultaneous stock conversion, acquisition, two proxy solicitations, numerous regulatory applications, and an offering of shares in the new organization, but our team got the job done with a minimum of delay and disruption. In fact, the process went so smoothly that it has been imitated by others, and recommended as an example by regulators since. We proudly represented the resulting institution for almost 20 years, and then represented it in its acquisition by a larger entity.

Reclassification Plan Benefits Client and Its Shareholders

Our client, a comparatively small but highly successful and much-beloved sport venue—in an extremely competitive industry—had enjoyed a growing level of stock ownership by the aficionados of the industry for many years. However, with its tangible assets appreciating in value over the years and stock ownership expanding, it was becoming increasingly difficult to avoid the requirements of SEC registration, an onerous and expensive process that would add significant expense and competitive disadvantage, thus threatening the stability of the organization. Further, because the shareholders had always been significantly enfranchised, they felt a personal sense of ownership that precluded changes that would affect their status as shareholders.

Mechanically, the simplest way to avoid SEC registration might have been to effect a reverse stock split, which would have been unacceptable to the client due to the cost and the resulting disenfranchising of many loyal shareholders. Therefore, our solution was to create two classes of stock and keep the number of shareholders of each class below 500. However, the challenge was to sustain the shareholders’ perceived ownership value of the new shares. Our team therefore worked with the board of directors to develop a recapitalization plan with two classes of stock with distinct differences, but with each class having sufficient rights to satisfy owners. The plan also included protections to inhibit either class from exceeding the limit on the number of shareholders, which would lead to SEC registration. We helped develop an informational campaign, first bringing on board concerned directors and then educating shareholders on the need for the change through a plain-English proxy statement and informational meetings to answer questions in an understandable manner. Ultimately, the recapitalization passed with overwhelming shareholder support, the client was spared the cost and disruption of SEC registration, and everyone got back to the serious business of enjoying the venue's activities and events.

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