Riverside simultaneously acquires D.F. King and M Communications

Client(s) Riverside Company, The

Jones Day advised The Riverside Company's European private equity fund (Riverside Europe Fund III) in the simultaneous acquisition of D.F. King, the U.S. proxy solicitor, and M Communications, the U.K. corporate communications firm.

This transaction posed complex challenges due to cross-border issues, the difficult financing markets, and the need to close both transactions simultaneously and without any interim period between signing and closing.

Initially, Riverside was focused on building a European-based corporate communications platform, and envisioned a Luxembourg holding company with Euro-denominated debt financing. With the help of Jones Day's London and Munich offices, Riverside negotiated the terms of the acquisition of MComm during the first half of 2007, as well as the details of the holding company structure, management equity compensation, and financing commitments.

Then, during the summer of 2007, Riverside began discussions with D.F. King and decided to acquire both D.F. King and MComm. This decision created several challenges. Since the deal now included a major U.S. component, the credit facilities that Riverside had arranged in Europe were no longer adequate to finance the deal. The need for additional financing, coupled with the deterioration of the global credit markets, required Riverside to re-engineer the capital structure of the combined businesses, add significantly more equity from the selling shareholders of D.F. King and MComm, and negotiate a new, multicurrency credit facility with a new group of lenders. In addition, the demands of the lenders, as well as myriad U.S. tax considerations, required a complete overhaul of the holding company structure from a Luxembourg holding company to a U.S. holding company. This overhaul in turn required a renegotiation of equity arrangements with management and other investors, many of whom were European individuals who suddenly found themselves investing in a U.S. corporation. Finally, since the overall transaction involved the simultaneous acquisition of two independent companies, neither of which would agree to sign a binding agreement conditioned on the acquisition of the other, Riverside was required to negotiate with the sellers of both targets and the lenders to achieve a single, simultaneous sign-and-close.

The Firm's fully integrated deal team, including M&A, tax, and finance lawyers in London, New York, Washington, and Cleveland, played a crucial role in keeping this complex process together and ultimately achieving a successful closing in early February 2008.