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Friday, 04 October 2013 15:24

MiBiz 2013 M&A Deals & Dealmaker Awards Adviser Winner: Tracy Larsen

Written by  Gary Anglebrandt
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Tracy T. Larsen, managing partner of the Barnes & Thornburg office in Grand Rapids, has led 35 M&A advisory teams in the last year for a total transaction value of more than $5 billion, including the $1.24 billion Wolverine World Wide acquisition of Collective Brands’ Performance + Lifestyle Group. Tracy T. Larsen, managing partner of the Barnes & Thornburg office in Grand Rapids, has led 35 M&A advisory teams in the last year for a total transaction value of more than $5 billion, including the $1.24 billion Wolverine World Wide acquisition of Collective Brands’ Performance + Lifestyle Group. PHOTO: REX LARSEN

When it comes down to the nitty-gritty of making a big deal, the heads of the parties in question may or may not be at the table, and the same goes for their bankers.

The group that definitely will be: The lawyers.

In the case of one of West Michigan’s biggest deals last year, Wolverine World Wide Inc.’s $1.24 billion purchase of a major portion of Topeka, Kan.-based Collective Brands Inc.’s business in May, there were “easily 50 lawyers” tidying up all the final details, said one of those lawyers, Tracy T. Larsen, managing partner at Barnes & Thornburg LLP’s Michigan office in Grand Rapids.

Larsen headed Wolverine’s advisory team in the negotiations.

“(Larsen) was more than a match for the New York attorneys on the other side of the deal. His overall strategy, gut instincts, negotiation skills and stamina were invaluable to the successful conclusion of this critically important transaction for WWW,” wrote Wolverine CFO Donald Grimes in nominating Larsen for the Dealmaker of the Year award in the adviser category.

The large number of lawyers resulted from the complexity of the deal. Besides Wolverine, there were two private equity firms working to buy the rest of Collective Brands’ business. The resulting combined $2 billion buy turned over Collective Brands’ Performance + Lifestyle Group to Wolverine, which picked up the Sperry Top-Sider, Saucony, Stride Rite and Keds brands.

The two San Francisco-based private equity firms, Golden Gate Capital Opportunity Fund LP and Blum Capital Partners LP, together bought Collective Brands’ Payless ShoeSource and Collective Licensing International operations.

Wolverine began looking at an acquisition of the Performance + Lifestyle Group in 2011 and made an overture at that time, but it was unsuccessful, Larsen said. When Wolverine met with success a year later, it found out on a Wednesday evening at 5 p.m. The public announcement was made the following Tuesday before the market opened.

“We basically never stopped for those six days,” Larsen said.

There wasn’t actually a negotiating table in this deal, at least not in the final heated days. The work was all done by phone, and it took place at all hours. Crossing all the Ts on the paperwork with four parties involved took a little longer than usual. “The documents were voluminous.”

The deal nearly doubled Wolverine’s revenues to about $2.5 billion a year.

“Tracy’s deal experience and savvy helped drive the overall transaction structure and successfully resolve a very complicated set of issues brought about by the nature of our joint proposal,” Grimes said. “He was a leader in keeping the team cohesive and on point through the deal process.”

Larsen was able to head off issues developing from the deal’s complexities, Grimes also said.

Among them were the separation of Collective Brands’ international business and the rules involved with the purchase of a publicly-traded company.

“The transaction was inherently different by its very nature, in that it was a club bid partnered with two private equity groups,” Larsen said.

Wolverine and the two firms formed a separate entity to present a clear, unified bid against other single bidders and to structure the deal as a merger. They then split apart the entity immediately after the deal.

“Tracy is our go-to guy, not if, but when we do our next deal,” Grimes said in an interview.

Larsen said the biggest challenge on complex transactions is dealing with all the “variables we don’t have control over.”

“My job running the legal team is to make sure everything comes together contemporaneously,” he said. “It’s trying to put some reasonable measure of control over things we can’t control.”

His trick to keeping all the balls in the air is a combination of communication, speed and setting expectations.

“I’ve always had this belief that time kills deals,” Larsen said.

Effective dealmaking comes down to preparation, anticipating obstacles and thinking creatively, he said. Locking in finances, key employees, vendors and regulatory issues such as antitrust laws at the front end is the way to ward off trouble, and he moves clients in this direction at the outset, he said.

“We come up with strategies to deal with mitigating issues at the front end,” Larsen said.

His work has led to professional accolades, including rankings and lists from Chambers USA and Best Lawyers.

The last year was a good one for dealmaking in West Michigan and the country because a return of the availability of financing coincided with an improved sense of confidence in the economy, he said.

Larsen has led 35 M&A advisory teams in the last year for a total transaction value of more than $5 billion. Apart from the Wolverine deal, those include:

  • Eight deals for Berkshire Hathaway’s HomeServices of America, including a joint venture with Brookfield Real Property Solutions Inc. to launch a new real estate brokerage network.
  • A Gordon Food Service buyout of Taunton, Mass.-based food distributor Perkins Paper, giving Gordon Food Service a growth path in the Northeast.
  • Fairfax, Va.-based government IT contractor SRA International Inc.’s acquisition of MorganFranklin, a McLean, Va.-based business and technology consulting company, as well as a sale of SRA’s health and human services division.
  • Meijer Inc.’s purchase of the plant operations of Bareman’s Dairy in Holland, Mich. Like the Wolverine deal, this one too involved more than two parties: Carlinville, Ill.-based Prairie Farms Dairy bought the Bareman’s distribution network and other assets.

Larsen’s international work includes helping Grand Rapids-based Bissell Inc. through a reorganization involving operations in multiple countries, representing SRA in the sale of a Czech subsidiary and representing HomeServices of America in buying two foreign businesses.

On the seller’s side, in most cases he recommends bringing in an investment banker to solicit parties’ confidential bids and negotiate for the best price. On the buyer’s side, he advises trying to get a seat at the table before the seller gets into a formal sale process.

“It’s always preferable not to have to bid competitively for a business,” he said.

  • Company: Barnes & Thornburg LLP
  • Annual sales: $345 million
  • Total full-time West Michigan employees: 49
  • Brief business description: Barnes & Thornburg is a full-service national law firm with offices from coast to coast. Larsen is managing partner of the Michigan office, co-chair of the firm’s Corporate Department and is a member of its National Management Committee.
  • Best practices for effective dealmaking: Prepare, prepare, prepare. Anticipate the obstacles. Think outside the box to find novel or creative solutions.
  • Personal information: Wife — Karen; Five children — Kristen (26), Paige (23), Alivia (21), Vanessa (18) and Becka (15)
  • Academic degrees: Indiana University School of Law, J.D. magna cum laude, 1984; Hope College, B.A. summa cum laude in economics, 1981
  • Community involvement: A lifelong hunter, fisherman and active conservationist, Larsen is a national board member of the Ruffed Grouse Society and has been involved in numerous initiatives to protect and enhance wildlife habitats and to encourage young people to get involved in the outdoor tradition.
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