Dealmakers Q&A: Quarles & Brady's Mark Ehrmann
Mark T. Ehrmann is a partner in Quarles & Brady LLP’s Madison, Wisconsin, office. His corporate services practice spans more than 20 years, and is focused on representing companies, owners and investors in domestic and international stock and asset acquisitions and divestitures, public and private financings, mergers and other corporate reorganizations. Ehrmann also works closely with emerging companies and their investors in forming their companies, completing agreements among founders and employees, protecting intellectual property, and securing angel and venture capital financing.
As a participant in Law360's Q&A series with dealmaking movers and shakers, Mark Ehrmann shared his perspective on five questions:
Q: What's the most challenging deal you've worked on, and why?
A: I find that the most difficult deals do not involve complex legal issues, but complex personalities. A deal I am working on now is an example. A disgruntled minority shareholder filed a lawsuit the day before a shareholder meeting to stop the transaction. After an emergency hearing, the injunction was denied. The parties actually settled the matter the next business day, proving that even litigation does not necessarily get in the way of a good business deal. One unique aspect of the hearing was the judge's shocked reaction when the plaintiff mentioned that he had other business dealings with the buyer and he did not believe his lawsuit would jeopardize the other relationship.
As for complex legal issues, I find that tax and environmental concerns often result in complex structuring and drafting issues. It is important to have colleagues who are experts in these areas, but who also understand business approaches to resolving issues.
Q: What aspects of regulation affecting your practice are in need of reform, and why?
A: I work with a lot of emerging companies who do not have any legal budget. Many of the state and local regulations are designed for larger companies. I would like to see exceptions to those regulations which would waive certain burdensome filing requirements. For example, it would make sense for a state to waive the organization and annual filing requirements for companies with fewer than five employees or less than $500,000 in annual revenue. I am concerned that the administrative costs outweigh the benefit of having that information.
Q: What upcoming trends or under-the-radar areas of deal activity do you anticipate, and why?
A: I would answer this in two respects. As far as deals, I am seeing increased emphasis on investments in the information technology space. Many entrepreneurs in this space have no protectable intellectual property and not an extensive business plan, but they are receiving interest from multiple investors. Many new accelerators and investors are helping these companies get additional traction. Investors seem to be looking for deals which are more likely to yield quicker returns on their investments.
The second trend I am seeing (especially with respect to these deals) is more simplified and consistent investment documents. Investors are seeing the benefits of not hindering their investments with legal documents which are not understood and utilized by other investors. As a result, documentation is becoming shorter and more consistent. It is easier as an attorney to advise a client as to what is "market" or "customary." I think both of these trends are positive.
Q: What advice would you give an aspiring dealmaker?
A: I think it is relatively easy to learn the legal skills to do deals, but it is harder to learn how to balance the personalities of clients and others. There are many times where a young attorney will need to work with unreasonable and sometimes rude clients and opposing counsel. I tell my colleagues to take the high road. Be firm, but fair and respectful in your discussions. In addition, I think an individual's reputation is important. If you promise to get something completed or finalized, follow through to make sure it happens. Treat difficult situations as a learning experience. Over time, these situations will not seem so bad and you can use what you learned to benefit you in other matters.
As far as learning the skills necessary to become a good transaction lawyer, take advantage of opportunities to learn from a variety of experienced attorneys, including opposing counsel. There are dozens of styles and personalities that are effective, and utilizing what you learn from others in the process will help develop a style you can use. Finally, do not be afraid to ask questions. The answers will help guide you in future situations.
Q: Outside your firm, name a dealmaker who has impressed you, and tell us why.
A: I have been impressed with most of the lawyers I have worked with over the years. I generally find them as a group to be intelligent, hard working, honorable and devoted to their profession. One lawyer who stands out specifically is John White, a securities partner with Cravath. John and I worked on a public offering when I was a young associate and he was already a partner. Unlike many partners in large New York firms, I found him to be helpful and respectful of my opinion as a young lawyer and willing to help teach me how the process works. That deal was unique because it started before and ended after the financial meltdown in the late '80s and was completed when the closing proceeds of an IPO were paid in next-day funds. Being the youngest associate at the closing, I had the pleasure of personally bringing a check for $65 million back with me in my coat pocket. I did not take the flight attendant's offer to "put my coat upfront."
Another interesting story from a similar securities transaction, occurred when, after spending all night at the printers, I was selected to deliver the filing to the U.S. Securities and Exchange Commission offices in Washington. The client chartered a Learjet for my trip and arranged a stretch limousine to deliver me and the paperwork to the SEC. I was disappointed to realize that the SEC is not a gothic building with marble staircases, but a normal office building. I was greeted by a clerk, who stamped my letter and uttered "you are filed." With the use of electronic filings, young attorneys miss the chance to have experiences like this.