Japan M&A Veteran Lands a New Job

Michael O. Braun, an international corporate attorney and a specialist in Japanese m&a, recently joined the law firm of Morrison & Foerster. Braun, who became a corporate finance partner in the firm’s New York office, had been a partner at Bingham McCutchen. Prior to that, he was a senior partner at Richards & O’Neil. Born and raised in Japan, Braun has represented some of Japan’s largest companies in their U.S. transactions. He estimates that during the 1980s and 1990s he did about 85 deals in the $20 million-to-$100 million-dollar range with Japanese clients. Recently, he represented Japan’s largest brewer, Kirin, in a joint venture agreement with Anheusher-Busch Cos. Morrison & Foerster, with its well-established Japanese transactional practice, has recently represented SOFTBANK Corp., in its $1.5 billion strategic alliance with Cisco Systems Inc., and Hitachi Ltd., in its strategic alliance with International Business Machines Corp., including Hitachi’s acquisition of a controlling interest in IBM’s hard-disk drive operations. Mergers & Acquisitions spoke with Braun about the likely challenges he will face in his new position and solicited some advice for U.S. dealmakers when they are negotiating with Japanese counter parties. As a basis for his thoughts on m&a in Japan, Braun provides a thumbnail sketch of the Japanese economy. He describes it as being in a state of deflation in which consumers have adequate buying power but in which the government and major companies are stymied by layers of bad debt that have never been cleaned up. The economic weakness among large companies will lead to bankruptcies and increased consolidation despite some cultural norms, which have slowed the implementation of these efficiencies in the past, he says. “In Japanese business culture, layoffs have been frowned on. So you saw mergers in which the stronger company absorbed the entire workforce of whoever they bought,” Braun says. This disinclination to cut the head count, along with a tendency to try to avoid bankruptcies, has made some forms of corporate reorganization less effective in Japan than they have been elsewhere, he adds. Braun expects to see more Japanese m&a, he says, because “it is no longer acceptable for a Japanese company to be one of the top five players in a given industry.” As the companies look to grow, he says that he will try to win as many assignments as possible to work on those deals. Braun also expects to see a upswing in spin-offs as Japanese companies retrench and concentrate on core competencies. Just as he expects an increase in spin-offs he says that Japanese companies will still buy U.S. and other foreign assets but that the acquisitions will tend to be of companies engaged in lines of business close to the parent’s bread-and-butter operations. The outlook for more U.S./Japan deals looks promising, in Braun’s view. “The big Japanese companies want to compete globally and they will be looking for acquisitions and alliances to achieve this goal,” he asserts. Turning his attention to what he might be able to contribute to the skill set of Americans doing deals with Japanese partners, Braun remarks that Japanese dealmakers tend to be thorough and straightforward. Sometimes their investigation of deal details can be maddeningly slow and Americans might assume that they are waffling, but Braun says it is more often the case that they are being meticulous and are still committed to the deal. Braun advises Americans that they shouldn’t assume that their Japanese counterparts understand everything they are being told. These kinds of communication gaps will delay – though not kill – deals, he adds. The Morrison & Foerster partner says that one significant new development that will affect Japanese m&a and other business relationships between Japanese and American executives is the executive certification requirements of the Sabanes-Oxley Act. “Japanese executives will hesitate to meet all the requirements of the act,” he says. This may change their fundraising efforts. Braun says that since they will continue to have difficulty raising money at home and will opt out of some U.S. fundraising relationships, he expects to see more private placements and 144(a) deals. Service Appointments Adams, Harkness & Hill – Kevin J. Dunn has joined this investment banking firm as managing director, m&a. He had been with SunTrust Robinson Humphrey, where he beaded the firm’s Boston office and was co-head of the firm’s m&a practice group. Deutsche Bank Securities – The firm has recently named Brent Milner as head of health care investment banking for the Americas. He joined Deutsche Bank in 1990. RSM Equico – Gary Green has been named director of buyer development at this middle-market investment bank. He had been a managing director in the transaction advisory group at Arthur Andersen. Private equity appointment Gores Technology Group – Scott Honour has joined this privately held acquisition and management company as a managing director and head of strategic development. In this position he focuses on acquisitions. Honour comes to Gores from UBS Warburg, where he had been a managing director, specializing in advising private equity firms on sourcing transactions, capital raising, and divesting portfolio companies. Corporate appointments ABRA Auto Body & Glass – Timothy S. Allen has been named VP of corporate development at this vehicle repair company. Previously he had been senior director of strategic investments at Metris Cos. Chronimed Inc. – The company has appointed Brian Reagan as VP of corporate development. He had been president of Orchard Hill Partners, a business consulting firm. He had participated in the development and financing of numerous high-growth companies in the health care field and has broad experience in m&a. Chronimed is a drug distribution company. Viper Networks Inc. – This Internet protocol technology company has recently formed an internal acquisition and investment team to pursue growth opportunities through acquisitions and direct investments. The team is led by Jason Sunstein, director and VP of finance, and Daniel A. Liebermann, an investment analyst for Sierra Capital and the most recent addition to Viper’s advisory board.