Scott Chaplin, Senior Vice President, General Counsel and Secretary at Vista Outdoor sat down with Sam Eberts, Chief Legal Officer, Corporate Secretary and Senior Vice President of Corporate Affairs at Laboratory Corporation of America Holdings to reflect on recent divestiture and acquisition transactions in an interactive fireside chat at the 2015 Chief Legal Officer Leadership Forum in Washington DC on June 16. Throughout the conversation, Chaplin discussed "rationalizing the deal" and best practices for streamlining the acquisition process, while Eberts weighed in on lessons learned from his organization’s recent spin-off.
As the two GCs commented on the different challenges that their organizations have faced throughout recent transactions, Chaplin reflected on Vista Outdoor’s recent spin-off from Alliant Techsystems Inc., which stemmed from the need to separate the sporting goods division from the commercial business. In completing the spin-off, Chaplin commented, Vista Outdoor was able to focus on providing high-quality support in one area, creating exciting growth opportunities for the organization. Chaplin also reflected on some of the complicated aspects of the spin-off, due to regulatory, competitive and integration issues.
"Have your acquisition team ready. You really have to know who you'll use for your outside counsel ... because some of these deals can happen quickly"
Eberts also opened up on Laboratory Corporation of America Holdings’ recent acquisition of Covance, and the "brand new business" that the transaction has ushered into the organization. Looking back on the acquisition process, he reflected that the acquisition highlighted how critical it is for companies of all sizes to have an acquisition plan in place, particularly with regards to talent management.
"At most companies today, you're either an acquirer, a target or both," Eberts said. "All companies should have some type of acquisition plan."
Eberts emphasized that acquisitions can happen quickly, and having the right talent in place to complete a transition is essential. Hiring talent based upon where an acquisition strategy will go in the future ensures that an organization has talent in house in the event of a sudden transaction.
"Have your acquisition team ready," Eberts added. "You really have to know who you'll use for your outside counsel … because some of these deals can happen quickly."
Eberts also noted that the way in which an organization describs its market and its competitors is an important consideration during the regulatory review of a transaction - but if an organization has an acquisition strategy in place, it will be much more prepared for this review process. Eberts added that having a strategy in place also ensures that the organization can provide details about how it views the marketplace and how its acquisitions can add to the competitive landscape.
"If you're not out there acquiring, someone's out there looking at you. And even if you're out there acquiring, there's still someone out there looking at you."
Shifting gears, Chaplin compared an M&A strategy to a family planning for a move. An acquisition serves as a "housecleaning of sorts," forcing an organization to evaluate every part of its business in a different light. In this aspect, building an M&A strategy can also help a company determine whether it's a better suited to become an acquirer or a target.
"If you're not out there acquiring, someone's out there looking at you," Chaplin said. "And even if you're out there acquiring, there's still someone out there looking at you."
More broadly, Chaplin reflected that an M&A strategy drives a "cleaner, better company." He pointed out that an acquisition can become an extremely complicated endeavor if an organization lacks the processes and methodologies to complete an integration. Different company sizes, cultural norms and other factors can also play a crucial role in an acquisition.
Building off of Chaplin’s comments, Eberts noted that integration was one of most critical elements that they evaluated leading up to the Covance acquisition. Factors such as determining the right workforce and who will stay at the company can make an acquisition complex, he added, but streamlining the acquisition process and having a plan in place to deal with these challenges can make everything easier for an organization and its employees.
"My experience has been that we're typically better if we move quickly and are clear with people who are going to stay in the organization and are not going to stay in the organization," Eberts said. "We want to identify the people we want to stay and provide them with incentives."
Integration planning started before the Covance acquisition was finalized, Eberts added.
"Very frequent, very open communication with all the employees to let them know what was going on, even when we told them we didn't have an answer to the question yet … [helped make] people comfortable."
Publicly traded companies in particular "need to be on top of their game" during the acquisition process, Eberts noted. These businesses are constantly watched, but planning can help publicly traded companies minimize integration problems along the way.
"When you launch and the merger is complete, you want it to be successful. That [requires] planning, and then planning more and then planning even more after that. And then planning for all the things that could go wrong on day one."
Contingency plans are essential, Eberts added, because acquisition problems can arise at any time. He also highlighted the importance of ensuring that the business can continue running without major disruption during an acquisition. A critical part of achieving this stems from managing and assuaging employee uncertainty throughout the acquisition process.
"Very frequent, very open communication with all the employees to let them know what was going on, even when we told them we didn't have an answer to the question yet … [helped make] people comfortable," Eberts concluded.
ABOUT SCOTT CHAPLIN:
Scott D. Chaplin is Senior Vice President, General Counsel and Secretary for Vista Outdoor Inc. Vista Outdoor is a leading global designer, manufacturer and marketer in the growing outdoor sports and recreation markets. The company operates in two segments, Outdoor Products and Shooting Sports, and has more than 30 well-recognized brands that provide consumers with a range of performance-driven, high-quality and innovative products.
Prior to his role at Vista Outdoor, Scott served as Senior Vice President, General Counsel and Secretary from 2012-2015 for ATK, an aerospace, defense, and outdoor sports and recreation company. In this role, he had overall responsibility for the corporate legal function, including government contract oversight, regulatory compliance, ATK’s global sales team support, and oversight for product and intellectual property management.
Scott has expertise in developing, leading and advising on compliance and governance, acquisitions and investments, ethics, contracts, and pricing and procurements for defense and aerospace companies such as Stanley, Inc., where he served as Senior Vice President, General Counsel and Corporate Secretary. He worked for BAE Systems Information Technology, as Vice President and General Counsel. Scott also worked as an adjunct professor of law at American University, Washington College of Law and as an associate attorney for Morgan, Lewis & Bockius LLP and Reed Smith LLP, both in Washington, D.C.
Scott earned a Bachelor of Arts degree from the University of Massachusetts Amherst and a Juris Doctor degree from American University, Washington College of Law. He is a member of the Maryland, District of Columbia, and Virginia bar associations and an arbitrator for the D.C. Bar Arbitration Board.
ABOUT SAM EBERTS:
Sam has more than twenty five years of legal experience in private practice and as an international corporate legal executive and serves as the Chief Legal Officer, Corporate Secretary and Senior Vice President of Corporate Affairs for Laboratory Corporation of America® Holdings (NYSE: LH), the world’s leading healthcare diagnostics company with more than 48,000 employees in over 60 countries. Sam leads the company’s Legal, Compliance, Risk Management, Internal Audit, Community Affairs, Privacy, Public Policy, Media and Government Relations Departments.
Sam is the Lead Independent Director and member of the Investment Committee for the Boston based venture fund MedCap Fundamental Holdings and is a principal with Daerter Group, a venture capital firm based in New York. He serves on the Board of Alpha Marketing, a premier advertising and channel marketing firm based in North Carolina. Sam serves on the Wilson Council for the Woodrow Wilson Center for International Scholars in Washington, D.C., a non-partisan global policy institute and was appointed to the Advisory Board for the World Policy Institute in New York, a non-partisan think tank for global policy analysis. Sam serves on the Council for Entrepreneurial Development, a private, non-profit organization supporting the entrepreneurial community in the Research Triangle Park, and is mentor with the Council’s Venture Mentoring Service, working with entrepreneurs to provide practical, day-to-day professional advice and coaching. He is Chairman of Easter Seals/UCP of North Carolina and Virginia, one of the largest non-profit service organizations in the country. Sam was also recently appointed to serve on the board of the Alamance Community College Foundation.
Sam is a frequent speaker on healthcare, leadership and the legal profession and has served as a guest lecturer at the Kennedy School of Government, Duke University School of Law and the Baylor School of Medicine. A graduate of Loyola University of Chicago and the Boston University School of Law, Sam has also served as an Adjunct Associate Professor at the University of Texas School of Public Health, Division of Management, Policy and Community Health.