Transcript: 

Adam: Welcome back to Disputes and Perspectives. I'm Adam Massaro, a partner in the newly founded Reed Smith office here in Denver, and I've got a special guest with me, Liz Graffeo, one of our new partners who just recently joined us. Welcome, Liz.

Liz: It's good to be here.

Adam: So you're obviously new to the firm, but it sounds like you're already getting busy and got a bunch of different activities and projects. In fact, I think you've been working on a deal now. Tell the audience a little bit about what your practice is and what you do.

Liz: Yeah, absolutely. I would say I've got sort of two main streams of work. One is my sort of bread and butter daily advising public company clients on just their ins and outs every single day. Any sort of securities offerings they're doing as they face governance issues, just the day-to-day things you face as a public company. And then the other half of my practice is really doing a lot of public company M&A, strategic transactions, and things like that. And that is what, when I joined Reed Smith, came on hot and heavy. And so I'm right in the midst of several larger transactions.

Adam: And for your capital markets practice, have you always done that?

Liz: Oh, absolutely. Yeah. I actually was the first year doing a whole wealth of different things when I got staffed on an IPO. And it was in that moment that capital markets hooked me and I have never looked back.

Adam: What is it that draws you to doing capital markets work?

Liz: I think it's the energy. I just feel that adrenaline rush. I think even in my personal life, I'm a little bit of an adrenaline junkie. And getting in there on a big deal and trying to balance all the different things that come with that, it just really lights me up.

Adam: So for those of us that don't do your practice area, let's start with the run-up or ways that one can turn their company public. What phase of the process do you typically get involved in?

Liz: I would say for me, because I'm pretty pure capital markets, I come in when the company is going to start thinking about an IPO. So fairly far down the path, or a public company that has been public for a while, and they're thinking about some sort of strategic transaction. And of course, here I'm talking specifically about the transaction part of my practice, rather than that day-to-day governance, which is more with quite advanced public companies that are already in the midst of it. But when we're looking at a new IPO company, I'm pretty close to when you're really starting to strategically think about going in that direction.

Adam: In a typical arc between the time the company may intend to go public and when you get involved, what does that typical timeframe look like?

Liz: I wouldn't say there's necessarily a typical timeframe, because one company could be a couple years out, but they're really starting to think about it. And another company I even had recently where it was like, we'd like to do this next month, which comes with its own challenges. But I think that any timeline should be the timeline that's right for that particular client. So I don't think there's one particular timeline that follows.

Adam: Now we see every year eye-popping IPOs with these huge valuations and huge numbers. Is that the full extent of your business or explain to us sort of where your practice lies amongst the different types of IPOs that are out there?

Liz: No, I think with cap markets, everyone thinks of the IPO as like the transaction. And of course, it's a very exciting transaction to be a part of. And we're also doing a lot of SPAC IPOs as well, which is a little bit of a different trajectory, different type of company looking at that. But I would say for my practice, I not only advise companies at that stage, but also companies that perhaps, if it's a life sciences company, could be a reverse merger, where they're a private company looking to go public via that type of strategic transaction. So there's all sorts of ways to go public. And then also we help on the opposite side, where a company is perhaps looking to be taken private. So I think, yet again, there's not just one story for our clients. It's whatever access they're trying to make to the capital markets and then us guiding them through that.

Adam: When it comes to things like audits, what should clients generally expect to have as some of the things in addition to the legal aspects? What do they need to be thinking about far enough in advance so that if they do want an IPO, they realistically can do it?

Liz: I think that's right, that engaging that audit relationship as early as you can is key. And so we do see different clients approach that in different ways and very different when you're thinking about a SPAC IPO, where you may be engaging auditors more near in time to your transaction. But I think that from an auditor perspective, it's just really important to start engaging on that relationship and get your team quite prepared on what they're going to need to be doing. Thankfully, today, there are a lot of advisors that will help hold the hand of a company that is trying to go through an IPO, and they'll actually help them figure out what that process looks like. And then we also come in hand-in-hand with those advisors to do that background work.

Adam: To me, I always hear the reason to do an IPO is to get capital, to do a host of things, including potentially expansion of business lines, all those things. What are typical reasons that your clients are seeking an IPO?

Liz: That is spot on. I think it's the access to capital, being able to really engage with a new set of investors, and it's money for the company.

Adam: When it comes to an IPO, certainly that's always the goal, but it doesn't always happen. Is that right?

Liz: Absolutely. If you're thinking about a company that has reached out to us a couple years in advance, there's really no way to predict what you're going to look like two years down the line. You may have changed an entire business model. Think about, again, calling to the life sciences type of company. So much can change for that company in a two-year period. I think you can come to us as advisors when you sort of have an idea. And then thankfully here at Reed Smith, we've just got a wealth of different knowledge. And so if IPO is what you're thinking first, but then at some point it makes sense to pivot to a different type of strategic transaction or a different type of fundraising mechanism, we have all the knowledge here at Reed Smith.

Adam: You mentioned some of your practice also involves capital markets and mergers and acquisitions. Is that right?

Liz: Yeah, absolutely.

Adam: Okay. Tell us a little bit about what that world looks like.

Liz: So I would say that in the public company M&A space, my traditional transactions there are two public companies that are going to merge in some way. Whether that's a reverse merger where just one company is kind of taking over the other company's public entity. Whether that's two companies coming together because they feel like they have benefits for each other that would make them better as a combined entity rather than two separate entities. And in either of those settings, we would walk our client down the path of becoming the ultimate listed company or perhaps delisting and handing that reign over to a new company.

Adam: So have you done work on both the side of the company acquiring as well as the company being acquired?

Liz: Yes, I have. I think both sides are quite exciting and just tell a different story for the company.

Adam: And when you're on the acquisition side, from your perspective, what are the main areas you're focused on for purposes of driving the deal and establishing the key issues that matter for your practice?

Liz: When you jump into a deal like that, you're really kicking off the board advisory work. And that means that the company is evaluating what their options are. They're perhaps looking at peer companies, looking at strategic opportunities. And there is a lot of upfront discussion about engaging those other parties in the right way and exploring your options as a company to expand your company. And that is the most exciting part, I think, for a company to really kick off and envision what the future could look like. Once you get that all set up, you're jumping into a transaction. That is negotiation. Once you sign a deal, doing your shareholder meeting, figuring out what the transition relationship is going to look like, and then getting to closing.

Adam: Because it's certainly an issue that's popped up from time to time with respect to states of incorporation, things like that. Obviously, historically, look at Delaware, but we're now seeing players like Nevada and Texas come in. Do you have a sense of where that may be heading from a preference and whether we truly are going to see a flee out of Delaware, or this may just be a moment in time?

Liz: I wouldn't necessarily categorize it as a flee out of Delaware, but rather an increasing of optionality. I agree on the Texas. I've done recently Washington. And then at Reed Smith, I will say we are actually doing quite a bit of international work as well. So where the company is incorporated internationally, it is doing a public listing on a US exchange. And so each of them, again, tells their own story of what's right for the company. And having those new options, it provides opportunities for the client to explore. In particular, you may never know whatever the client's business happens to be. There could be a state or country that's going to offer them substantial benefits based on whatever that governing structure is in that location. And I think that is an exciting thing to explore for companies. So I think it's a benefit to have more optionality. And yet, I do think Delaware will continue to prevail as the most common.

Adam: I want to talk a little about the deal process itself. I litigate. It's not my area. But I can see sort of this peak and then downturn from a deal itself. And I'm just curious from your perspective, like how the deal feels from the lawyer's perspective, and how that sort of arc looks like and what it feels like when you're in that, I guess, apex and working your way down as well.

Liz: Absolutely. I will say I am currently in that apex on a couple of deals. And for me, the apex is just an extraordinary thing to be a part of. To see that many parties acting in concert, it really is an impressive machine to watch and to be a part of. But I would say that from a strategic perspective, the arc begins in a way where everyone's brainstorming, what is this going to look like? And for many lawyers, myself included, that allows you to really design a deal hands-in-hand with your client and whatever target you may be looking at. So that is an intellectual state of practice, I would say, that is a unique part of a deal, and that it could last any time from a month and you find the right partner to several years of considering those issues. So the beginning of this arc could be quite long. It could be quite short. But then once you get into the actual, you are in it with a target or you are the target, and you are now negotiating across from perhaps one firm, perhaps many firms, and you have to really consider all of the issues, that's the apex that I think you're referring to, where you have to really now look at the details of the company, the detail of the other companies involved, and issues that you may never have thought about during your preliminary stage start to come up and need to problem-solve, but problem-solve at lightning speed. And I would say that for me, that is truly the most exciting part because you never know what's going to come up and you get to really engage with various different lawyers on how to problem-solve.

Adam: You mentioned at the beginning of the pod that you also enjoy adrenaline on your personal life, and it seems to marry with your business life. Walk me through how you scratch that itch on your personal side.

Liz: Absolutely. I will say I met my husband mountain biking, and I think that biking is for me the number one way that I engage with the adrenaline side of life. I did recently have a child, so a little less biking adrenaline junkie in my life at the moment. But that's my number one. But I do have another element of adrenaline junkiness in my life is that I actually serve on the Larimer County Search and Rescue Team, which serves the Rocky Mountain National Park and all the way north of Colorado, and we respond to all sorts of things if there's ever avalanche, a climbing accident, a mountain biking accident, whatever it may be. And I do get a lot of joy out of that part of my life as well.

Adam: On the mountain biking, or is it mountain biking or road biking?

Liz: We do both. I met mountain biking, and I have fairly recently developed a true love of gravel cycling.

Adam: And then on the search and rescue, when did you get involved in that?

Liz: I think that I'm coming up on my fifth year anniversary of search and rescue. I actually took a month off at some point, I think I was a fifth year or something like that, where I got my ERT. I had actually had a really bad mountain biking accident myself, and it just felt at that moment like a personal thing I needed to do. So I took, I think it was about three or four weeks off, became an EMT, and then joined the search and rescue team. And since then, I've been able to serve my community in that way.

Adam: Have you ever had a deal at the apex point while you're also doing a search and rescue?

Liz: No, to be frank, the answer to that is no. I think I'm either... That's the lovely part about deal flow is that if you are in an apex on a deal, you are all in on that. And then when you're in sort of a downtime, you really can offer yourself and your adrenaline junkiness to other aspects of your life.

Adam: When it comes to the other sort of side of the practice, you mentioned governance, is that right?

Liz: Yes, yes.

Adam: All right, let's give the audience a little bit better sense of what that looks like.

Liz: Governance is where you have your clients that you talk to every week. Every week, you've got touch points with those clients. And the capital markets are constantly evolving, depending on political circumstances, what different agencies are doing, and just general international and just US economic conditions. And so at any point throughout a given year or a given cycle, you're going to be facing different issues. For a moment, it was climate change. Another moment, cybersecurity, whether it's taxes. You're just guiding your client through every one of those issues. And at each time, you need to be very tapped into the capital markets and into what other entities are doing so that you can market check for your client and give them the best advice for how they handle these different trends. But for their specific needs.

Adam: For that audience, is it always the board, the CEO? Who is your audience when you're dealing with governance issues?

Liz: My audience on the day-to-day would normally be the GC or whoever is on the GC's team that's really working on those issues. Now, of course, once the issue is sort of sorted out between management, the GC, and the appropriate other advisors, a lot of times we will make board presentations to make fundamental decisions about direction. But on the day-to-day, it's certainly the legal team of a public company.

Adam: It does seem like governance does somewhat mirror whatever the societal issues we're dealing with, which is different than most of the laws looking backwards. Whereas here, you actually have a forward-looking issue. How do you stay abreast of issues that you expect public companies to face on the governance side if it's potentially forward-looking?

Liz: The easy answer would just be paying attention to the news, paying attention to SEC comment letters and enforcement actions and what's going on both at the SEC and also just generally in the news. I think it's really important as a capital markets lawyer to always have a finger on the pulse of the news cycle. But on top of that, you're really learning on the fly. I remember when cybersecurity became a real focus, and it will continue to be a focus for quite some time, really diving into the new rules as they were coming out, making sure to really familiarize yourself, and just taking that educational part of your brain and diving into the issue to really get to know it. And a lot of times, you have to do that very quickly so that you can advise your client on whatever their needs may be.

Adam: Now, you've been in private practice for about a decade. And I describe private practice as living on the moon or Mars. It's not someplace you're designed to live, but we figure out a way to do it. And I'm always curious. You've obviously mentioned some of the things like mountain biking, all those things, which are great. Anything else that you can share with our audience about how you make the private practice work in a way that it's beneficial and not detrimental?

Liz: Absolutely. I think you have to love it. You have to really love what you do. And I feel incredibly fortunate that I do love what I do. And when you do have that really positive connection with your work, you don't bring it home in a bad way. You bring it home and over the dinner table, you're talking with your spouse, your kids, your friends, whoever is at your dinner table about your day. And you are lit up. And I think that energy then does resonate throughout your relationships, even in the times when you're really busy and you're not able to tend to those other relationships in the way that you would like to do every single day. And so I think the love of the practice is the way that I make this work. And I think that then the other part that you make it work is just making sure you really do show up for the people in your life when you do have the time and make that extra effort and you enjoy every moment that you have when you're not quite busy.

Adam: Since you deal work, I'm always curious. It feels like deal work does not necessarily abide by vacations, all those things. Do you have a specific spot, a wild spot you'd rather close a deal outside the four corners of your office?

Liz: Oh, yes. Oh, yes. I think my husband would say she's closed a deal from bed because you happen to be at your in-laws house and there's no desk. And so what do you do? You're laying in a bed and blurring out your background and you just get it done. So absolutely. I think we've all been there as deal lawyers. And the deal doesn't slow down just because you are on vacation. But, of course, you also thankfully do get to take some really extraordinary vacations with your family during the slower periods.

Adam: Well, Liz, that is all the time we have for today on Disputes in Perspectives. But I appreciate it. And we're very thrilled that you have joined the Denver office as a partner. And we very much look forward to see what you do next here for us. So thank you.

Liz: You're welcome. And I'm so energized to be here. I feel like Reed Smith is the perfect fit. And I have just felt like part of the family since I joined. And I can't wait to work more with our clients.

Adam: Well, welcome. And thank you.

Liz: Thank you.

Outro: Disputes and Perspectives is a Reed Smith production. This podcast was produced by Shannon Ryan and edited by Julian Baughman. For more information about Reed Smith's litigation and dispute resolution practice, please email [email protected]. You can find our podcast on podcast streaming platforms, ReedSmith.com, and our social media accounts at ReedSmithLLP.

Disclaimer: This podcast is provided for educational purposes. It does not constitute legal advice and is not intended to establish an attorney-client relationship, nor is it intended to suggest or establish standards of care applicable to particular lawyers in any given situation. Prior results do not guarantee a similar outcome. Any views, opinions, or comments made by any external guest speaker are not to be attributed to Reed Smith LLP or its individual lawyers.

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