The importance of expert legal counsel during a large financial transaction cannot be overlooked. As businesses look to grow and expand, it is imperative that owners ensure that they’re in a position to succeed.
This is where experts like Justin Guilder come in. As the Managing Director and General Counsel at PennAve One LLC, Mr. Guilder has worked on a number of transactions in numerous different industries. The Corporate Growth, Capital Style editorial team had an opportunity to speak with Justin about his experience, as well as the importance of expert legal counsel during any major financial transaction.
Here is what he had to say:
CGCS: Tell us about your position and role at PennAve One LLC? How did your time at Kilpatrick Townsend & Stockton LLP and SNR Denton prepare your for the position?
Justin Guilder: At PennAve One, I’m a managing director and the General Counsel. On a day-to-day basis, I look for new investment opportunities, lead our due diligence team – internal and external resources, and then pitch those investment opportunities that pass scrutiny to my partners to determine whether we are going to invest. And if we decide, yes, we want to invest, I switch roles back to general counsel and lead the documentation process, engaging outside counsel to draft and formulate the specific documents we need for that transaction.
My previous positions prepared me for this role in several respects. The first would be the organizational skills that come with being a lawyer in a large firm. Having a number of clients and numerous matters you’re dealing with on a daily basis forces you to be extremely organized and methodical. That experience helped me ensure I maintain and track all of my documents, projects and priorities.
I also gained the ability to get up-to-speed quickly on a company and industry. As a practicing lawyer, for every new client and new matter, you need to understand a subject matter quickly. At PennAve One, that skill is important because I can dig into a new company and industry and feel confident I know who to speak to, what questions to ask, and where the pressure points in that specific industry exist.
Finally, the third – but certainly not the least important of the three – is the ability to clearly communicate my ideas through verbal and written communication; there are few things more important in the law than your choice of words. On the business side, the ability to clearly communicate so that your ideas aren’t lost or misinterpreted is invaluable.
CGCS: As a lawyer that helped companies through financial transactions and through the growth process, in your experience, which transactions are most difficult for small and medium-sized business owners to navigate? Why are lawyers and other consulting parties necessary to facilitate the process?
Justin Guilder: The most important part for lawyers and other consulting parties to bring to small and medium business owners is the expertise of what’s standard in a specific transaction. For instance, small and medium business owners, whether they’re in high-growth companies or are struggling and need to bring in capital through debt and equity, if they’re able to attract an investor, they’re probably good at what they do. They’re good at their business. They know their space, and that is essential for them to succeed at their job.
But they probably do not know what to look for in transactional documents. On the financial side, they may not know what kind of modeling they need to understand their cash and revenue cycles, particularly after the injection of debt or equity capital. So they’re not as experienced in that regard because their focus and skill set lay elsewhere. And if they don’t have good advisors who are subject matter experts and have keen eye on what the business really needs, they’re going to be at a disadvantage in a business negotiation when it comes to a transaction.
They may get bad advice that can ruin the deal or put the company in a compromised position. And if their lawyer or advisor does not know what is market standard right now for the necessary transactional documents or the types of negative or affirmative covenants that are necessary to accomplish a particular transaction, then that lawyer or advisor is not adequately representing the small or medium business in the transaction.
CGCS: What types of growth events and transactions are we seeing right now in the National Capital region? Why is that the case? How are we seeing that differ between industries?
Justin Guilder: I think right now we’re seeing a lot of venture capital transactions at an early stage. I think a part of it is a social aspect. Right now it’s hot to be a tech founder or entrepreneur; people would rather wake up and be Mark Zuckerberg than Michael Jordan. That’s a change in the way people view society. And DC is also trying to create an environment of supporting entrepreneurialism, and that’s really coming to bear where you see a lot of early stage opportunities.
A lot of people are looking for that initial investment or angel investment, or to fill the gap between angel and series A. And there are a lot of companies that don’t have market penetration yet but have good ideas, and whether they can execute those ideas remains to be seen.
I think in terms of industries, there’s certainly education and healthcare that seem to be really strong in this region. I think that education policy obviously is one of those areas which benefits from being in DC. Otherwise all education is very regionalized; this is the only national outpost for that.
For health, it’s similar. With the Affordable Care Act, there has been so much change in the governing law that has created a lot of opportunity for business. So there are a lot of companies looking to create value in that area.
Real estate is also very strong in the area. It’s starting to pick back up as far as redevelopments go. DC, for being the nation’s capital, is a relatively small city. The size continues to expand through real estate development. That process is playing out in neighborhood after neighborhood. So you see, on the large side, some significant transactions taking place and some major mixed-use developments coming online. And on the smaller side, there’s new retail space being created that must be filled. I expect this type of development, really expansion of DC, to continue for decades, albeit with stops and starts given the cyclical nature of real estate.