Inside the Deal Room: Unpacking M&A, VC Financing, and Work-Life Balance

Katya Valasek:

We're joined today by Eric Lauria-Banta, a 2017 graduate of the University of Minnesota Law School. He's a corporate transactional lawyer for the global law firm Foley & Lardner, where he does mergers, acquisitions, and divestitures.

Let’s talk about what it is you do. I wanna start with a bit of an explainer for your overarching practice. Can you talk a little bit about the different transactions that you do at a high level?

Eric Lauria-Banta:

I like to describe it as we buy and sell companies. We’re either on the buy side, representing the buyers, or on the sell side, representing the selling stockholders or representing the company that is that selling assets. A merger, for example, is only one type of transaction structure. From a high level, there's equity deals and there's asset deals. On the equity side of the deals, it can either be a merger, which is actually, it's a statutory merger under state law where companies merge and go together. But another way of purchasing the equity of a company is just a normal stock purchase, where you directly purchase the stock from the stockholders rather than going through this statutory merger process.

Katya Valasek:

And then what about divestiture?

Eric Lauria-Banta:

An example of divestiture is: we're not selling the entire company, we're just selling one business lines or one piece of the business or divesting that business from the overall company, but the entire company isn't being sold.

Katya Valasek:

So when you are working on these different types of deal structures, who are the parties involved?

Eric Lauria-Banta:

It's a variety. So I work on deals all the way from small, $5 million deals all the way up to billion dollar deals involving public companies. So when I'm on the buy side, public companies that are making strategic acquisitions; you know, they want to enter a new business line or they want to supplement their current business, so they buy a smaller company up. We also represent PE funds on the sell side. We represent a lot of family businesses. So it's a, you know, a small shareholder base, you know, mostly family members where they just got to the point where they want to sell their business. And so they're selling it to either another big strategic company or a public company or a PE fund or you know, really, well, really anyone, anyone who wants to buy it, I guess. But those, those are the big players.

Katya Valasek:

And PE funds are private equity funds, correct?

Eric Lauria-Banta:

Sorry, private equity funds. Yep.

Katya Valasek:

Is it possible for other entities to get involved?

Eric Lauria-Banta:

The main parties are the buyer and the seller. There's other parties that are involved in the in the transaction. If you really want to get in the weeds, there is, especially nowadays, there's something called R&W insurance, so it's rep and warranty insurance. When you're selling a company, you make all these reps and warranties. You're just saying all this stuff that you're saying is true about your business. You know, you own the assets, you own the IP, you're in compliance with laws, your financial statements are true. And what rep and warranty insurance is, is you engage a third party insurer and they will actually underwrite all of those reps and warranties. And so if any of those reps and warranties are false, usually the buyer would sue the seller. But with rep and warranty insurance, you actually would go after the insurer. So that's just one example of how a third party could get involved in these transactions.

There's also more like service provider type third parties. If you have a big shareholder base and you have to pay a hundred people, out of the closing proceeds, you'll engage a paying agent. Escrow agents will, a lot of times for these indemnification obligations, what we'll do is we'll hold back a certain amount of the proceeds. Say, you know, 5 to 10% or 1%. Every deal is different. It's negotiated. But you'll actually put that money into an escrow account. And then if you do have a claim, because like, you know, the reps and warranties are false, you can actually recover the money from that fund, rather than having to go against the sellers. So it’s just basically a way of making sure that the sellers don't take the money in and run away with it.

Katya Valasek:

Some of this is maybe familiar to people who are listening because they've bought or sold a house or a car. It sounds like it's just all on a much larger scale.

So you have given me a perfect transition point here. We understand big picture what it is you do. I'd love to learn more about the kinds of clients that you mostly work with.

Eric Lauria-Banta:

I mostly work with public company clients. They are very active in the M&A space, constantly buying and selling companies, tweaking their business lines, reworking the business. I also represent PE funds or kind of pseudo P funds. For example, one client, they'll come in, they'll buy say a $50 million platform company in the manufacturing space. And then what they'll do is with that platform company, they'll try to do add-on or tuck-in acquisitions. So they'll over the next three to 10 years try to build the business both organically and by buying smaller businesses where it makes sense. And then anywhere from five to 10 years after the initial acquisition, they'll sell it, hopefully for a multiple.

Those are the main types of clients on the buy side. And then on the sell side, it's a little more, kind of random or sporadic where clients come from, you know, apart from the public company that I talked about. It's, a lot of referrals with Foley being the biggest firm in Wisconsin. We just get a lot of the family businesses that want to sell. you know, where do they go? They come to Foley.

Katya Valasek:

Can you talk a bit about some of the venture capital work that you do?

Eric Lauria-Banta:

The work is somewhat similar insofar that it's contract based. It's transactional. it's certainly not litigation. it's a corporate practice. But it's not buying and selling companies. I represent startups basically from formation, through their entire growth stage, all the way up into an eventual sale or potential IPO. It's a lot of corporate counseling. Like I'll have, I'll have clients emailing me, every day, just kind of asking random questions about, like, how do I file an EIN? What do I do with this employee? I have to fire someone, what do I do?

Katya Valasek:

So I assume that means some of the counseling you're doing are recommendations at the very start of the business, right? What type of legal entity, what state do they incorporate in?

Eric Lauria-Banta:

Yeah, yeah, definitely. For you know, what state to incorporate in is pretty simple these days. We almost always recommend Delaware. Delaware is just kind of the gold standard, everyone incorporates there. They have a really robust Delaware code and statute and regulations built out there. If you ever do have to go to court, all of the judges there, you know, are really sophisticated. They understand these corporate business issues.

You know, the biggest “deals? that we do for startup clients or emerging growth companies are venture capital financings. And so in order to, operate the business and grow, they need to raise money. And so, venture capital firms or funds will invest in the company, at the seed stage they'll say invest, one to $2 million for 10 to 20% of the company. And so we'll represent our startup clients throughout that process.

Katya Valasek:

When you're making these early-stage recommendations, who are you giving these recommendations to?

Eric Lauria-Banta:

It’s the founder. There's usually, anywhere from, one to one to four founders. In Madison, for example, where I'm located, we get a lot of founders or startups coming out of the University of Wisconsin, Madison. A lot of people come out of that kind of ecosystem. Madison over the last, I would say, depends who you ask, but over the last 5 to 10 years has really developed a pretty robust startup and venture capital community where founders are really able to raise money here. Whereas in the past, everyone just goes straight to Silicon Valley and California. Um, but it's been pretty cool over the last decade or so, how Wisconsin and Madison, especially has kind of, kind of become a hotbed for startups.

Katya Valasek:

When you're working with startups, does your firm ever take equity instead of fees for payment?

Eric Lauria-Banta:

We do not. That is something that some firms in California will do, but we do not. It was a decision the firm made a while ago. It can get a little dicey as far as just the ethical considerations. If you have a monetary stake in a company, you could see situations where you might advise them differently than you would if you were just a neutral legal advisor. You know, for example, really pushing them to sell the company so that the law firm could exit their investment sooner than might be otherwise advised. So it's not something that the firm gets into. Every once in a while, if the firm has legal fees that the companies can't pay for one reason or another, in very rare circumstances, we'll take equity in exchange for fees, but relatively low dollar amounts. We're not making any sort of significant investment in the firm.

Katya Valasek:

I want to pivot now and talk a little bit about the role you play in the deals that you're assigned, especially now that you're a sixth year associate.

Eric Lauria-Banta:

Whenever people ask me about whether or not they should go to law school they say, I don't know, I really don't want to go. I hate reading and writing. I don't want to just sit in front of a computer all day and just read documents all day. And we certainly do a lot of that, but transactional attorneys, especially, we have a lot of interaction with people generally. And I'll just kind of back up and set the scene here.

The corporate attorneys on deals, to use a sports analogy, kind of quarterback the deal. So we run and organize the deal from start to finish. But there are anywhere from 5 to 30 people potentially staffed on a deal from one law firm. And those people are generally subject matter experts that are helping advise throughout the transaction. So, for example, tax, employee benefits, labor and employment, IP or intellectual property, government regulations, export controls. If you're on the buy side, you do diligence on the company that you're buying. You go through a whole diligence stage where you ask the seller all these questions about their business, essentially just trying to find things that are wrong or could result in liabilities post-closing that we want to find out about now before we buy the company because we don't want to have to deal with them after. So all these specialists get involved in the diligence stage. They also get involved in the purchase agreement. They'll provide comments to the purchase agreement.

The corporate attorneys basically have to organize this whole circus of attorneys. And so it's really, it's a lot of almost project management, I would say. I mean, high-level project management because we're certainly doing legal work at the same time, but it's a lot of emailing people, getting on the phone with people, coordinating questions and comments. As a six year associate, also overseeing the junior associates on the deals because the junior associates are mostly doing the diligence related tasks on the corporate side. That's just internal at the law firm. It's also coordinating with the client to make sure that they're involved throughout the whole process. And then, I guess, most importantly, negotiating with the law firm on the other side of the deal. Getting on negotiation calls with them, emailing back and forth. it's a lot of interaction. Deals move really fast. It can be fun, sometimes, most of the times. But it's certainly more than just going to work, closing your door, and sitting in front of a computer reading documents. It's a lot of interacting with people, which I think is one thing that maybe some people, a lot of people, might not always, at least pre-law school or even in law school, honestly, because in law school, people don't really get a sense of what transactional attorneys do. Some people like the project management side of it. Some people don't like some people would just prefer to sit down and just write a, write a litigation brief. But if you prefer a little bit more action and talking to people day to day, definitely a lot of that on the transactional side.

Katya Valasek:

So you're overseeing this group of attorneys who are working on this matter. You're in this project management role. Who do you turn to if you have a question about what is going on with the deal?

Eric Lauria-Banta:

Yeah, sorry. Yeah, I left out the most important part, the partner on the deal. The structure is the partner at the top, senior associate, and then anywhere from one to three mid-level to junior associates. And different partners take different approaches on how involved they are in the deals. But the partner is really the one that's running the deal from a high level, making all of the high-level decisions, and then kind of trusting the senior associate or senior counsel to kind of implement and kind of run the deal from start to finish, but advising when needed.

Katya Valasek:

Is this a benefit then to doing this type of work at a larger firm where you have easy access to all those subject matter experts?

Eric Lauria-Banta:

That is a great question. Short answer is yes. So, you know, that kind of joke among lawyers and some of the subject matter experts is that the corporate attorneys are kind of just the dumb corporate guys, because we have a very generalized knowledge. Like we definitely run the deal. We're very good at drafting the transaction documents. Can get it done start to finish. But we don't know, you know, don't really know anything about, I mean, we know some things because we can generally advise on this stuff, but once you start to get in the weeds, you start to get into trouble. You know, tax employee benefits, government regulations, export controls, all this stuff we know very little about. And so whenever we have questions, we almost always want to reach out to our specialists. And so having, you know, having a firm with, I think we have a thousand attorneys, with subject matter experts across the country is hugely valuable. Honestly, I can't imagine being at, let's say, a smaller firm where you are either expected to either just know that stuff, like you just have to have a lot broader base of knowledge across those subject matters, or if a client asks, you just have to look it up. Like I don't have to, I hardly ever do research on something because I just can go ask them about it because, they can tell me in 10 seconds instead of me having to research it for two hours.

Now there's, potential disadvantages or some people might not like that because some people at other firms might like to be involved in all the different subject matters and have a kind of broader base of knowledge. But I mean, I personally really like being at a bigger firm where if you have a question about the most obscure things, there's usually someone at the firm who can handle it.

Katya Valasek:

Do you work with attorneys at various locations of your firm or are the majority of the ones you interact with in the same office as you?

Eric Lauria-Banta:

I personally work across the firm. I regularly work with, definitely people in Milwaukee, but that's pretty close. I don't know if that counts. But Boston, Silicon Valley, Texas, Florida, Chicago, New York, I mean, pretty honestly, pretty much, pretty much everywhere. It's all seamless. Everyone at the firm just works across offices.

Katya Valasek:

Do you think for your practice area, it matters which location you work out of or is that no longer much of a concern?

Eric Lauria-Banta:

Yeah, so depends who you ask. So for me personally, with the startup and venture capital work that I do, the clients really are based in Madison. And so there's a lot of value of me being in Madison to service those clients. Not that they're necessarily coming into the office for meetings a lot, but just to be in the city, we'll invite clients a lot to basketball games and hockey games. Um, you know, we have a bunch of football tickets, all that stuff. So, you know, being here to be able to do that client development, managing client relationships is really important. But I do know there are certainly associates in the Madison office who don't have a single client that is even in the Midwest for that matter, let alone Madison.

Katya Valasek:

So as a senior associate, you mentioned that some of what you do is managing more junior associates. And I hear that you have a fun twist to that role that you get to enjoy.

Eric Lauria-Banta:

I do. I do. So I have a twin brother who is a, well now he's probably a mid-level associate, but junior to me. I'm a sixth-year associate, he's a fourth-year associate. He is in the Milwaukee office. And so every once in a while, we'll get on deals together where I'm senior to him. And I get to boss him around a little bit, which is especially fun because we're twins but he is older than me by 17 minutes. So technically, technically the big brother. But I get to, uh, I get to boss him around. Wo related story, I do get to the Milwaukee office quite a bit, And so for some reason, my dear twin brother has decided to grow out his hair pretty long. I mean, it's like long, like he puts it up in a bun, ponytail, all this stuff. So for a while, whenever I used to go to the Milwaukee office, I'd be walking around and everyone would be like, Oh my God, Justin, you cut your hair. But no, it wasn't. It wasn't. So it was just me.

Katya Valasek:

That's funny. So he followed in your footsteps. Do you think he saw any of your journey and made decisions one way or another because of that?

Eric Lauria-Banta:

Yeah, that's a good question. Um, yeah, he worked for a couple of years after undergrad. He was working at IBM in Rochester and I think he just hated his job and wanted to try something new. So he's like, “Hey, I'll go to law school like Eric..” you know, unclear if he. Hates his job just as much now, but he, I think, yeah, he did.

Katya Valasek:

So you're at a big firm, you're doing M&A work. The stereotype for attorneys in this sort of position is that you're working crazy hours and maybe not taking the best care of yourself. What do you do to make sure that you don't end up burned out or hating the work that you do?

Eric Lauria-Banta:

I mean, to be frank, it's definitely not a stereotype. Big law attorneys work a lot. Honestly, there's not a lot of work-life balance. Some firms, for example, like to style themselves as lifestyle firms where you can kind of have a life and work. But big law firms, they're just not that. We get, we get paid, um, you know, really kind of obscene amounts of money, at least I think. And the expectation is that, you know, you, you work for that. Now, not everyone is cut out for it. I guess that's why the turnover rate is so high among big law firms. But it just, it just kind of is what it is.

Now that said, to answer your question, there are ways to try to deal with it. You know, I think firms are getting better about trying to help associates set boundaries, offering more mental health resources. Now that said, you can't go overboard because you are expected to be available. You can't just be like, “Hey, I'm only working from, from nine to five.” But just, I mean, that's just something that's not acceptable at big law firms. But you can set boundaries where, let's just say like, you want your personal time to be half a day on Saturday, like these five hours. Or, like, no matter what I'm going to work out, every day or every other day seven to eight in the morning. And those are just times where you let everyone know like, “Hey, I'm not going to be available that hour because that's my personal time.” That's when I'm working out or doing what I need to do.

One way or another, you have to make up the time. Like you have to get your work done, bill the hours that you're expected to bill. But you know, the billable goal here is depending on what level you are, you know, 1950 to 2000 hours. Even the higher billers that are somewhere in the 2200 range. It really only comes out to like eight hours a day or something, and there's a lot of non-billable time. So you're working more than eight hours a day, but it's not like you're working 24/7 nonstop. Maybe that is the stereotype. You know, some big law attorneys like to tell everyone that they're working all the time. I mean, that's just not true. There are ways to kind of set boundaries to carve out time.

You know, make sure that when you're in the office, you're being efficient, you're getting your work done so that you have time to go home and have your personal time and personal space, to kind of relax as you need. But, you know, end of the day, it's something that you just have to do if you want to be a lawyer at a big law firm. You have to kind of just expect that it's not always going to be great. But there's definitely ways to ways to get through it.

Katya Valasek:

What do you like about your job?

Eric Lauria-Banta:

You know, honestly, I really like the fast pace of an M&A deal. For example, I just closed a deal where from the beginning LOI stage all the way to closing, I think it was 40 days. And maybe without context that doesn't mean much, but you know, deals sometimes can last like six months. So 40 days is extremely fast. We were working a lot. Had a lot of extremely busy nights, weekends. But there's something about working with your team, the associates you're working with, kind of just grinding in the trenches that is exhilarating. Maybe that's the sleep deprivation.

But it's something about working towards, I guess, just working towards a common goal and just getting something done and accomplished. It's just fun. Not that there's anything particularly noble or there's anything like special about being a lawyer in M&A, because in the end, we're just buying and selling companies for people. I mean, it's just, just kind of is what it is. You know everyone has to find, find something to get excited about to wake up in the morning. You like being, you know, no matter what you do, you like being good at what you do, kind of want to be the best. And when you have a team kind of firing and all, all cylinders, you know, kind of operating at the highest level, it's, uh, it's fun. It's fun. It makes it, it makes it worth it.

Katya Valasek:

I totally, totally understand that people think I'm crazy when I say I'm nostalgic about late night study groups in law school before finals. But that's really the last time I had that kind of passing around Chinese food containers and all working our hardest to try and tackle like stuff that was complex to us. So I totally understand that.

Eric Lauria-Banta:

Yeah, no, that's, yeah, that's exactly, that's exactly right. I ran cross country in track in, in college. And I, I've kind of taken the same approach and mindset, both the law school and to, you know, law firm life. just something about working hard and accomplishing goals. no matter what they are, that just is fun. It makes it worth it.