April 24, 2008

Deal Making In The Internet Age: An Interview with John J. Maalouf

There's a wonderful interview of Mr. Maalouf which the videovoice can be seen by clicking here.

Mr. Maalouf of the Maalouf Law Firm can be contacted through his website here

John J. Maalouf of Maalouf Law Firm Interview

John J. Maalouf represents Fortune 500 companies and small business regarding all aspects of corporate and finance law.  He is known as one of the best in attacking the issues that his clients’ face.

Interviewer:  Janice Marie – Close-Up On America’s Business on January 8, 2008

Janice:  In today’s heavily regulated and highly competitive world, corporations are facing greater scrutiny and larger challenges than ever before meeting those challenges successfully requires an attorney or team of attorneys with expertise in all aspects of corporate law to help you structure and protect your company so you can maximize your success.  With us today is one such attorney.  Hi, I am Janice Marie with Close-Up on America’s Business.  We are high above the trading floor at the American Stock Exchange in New York City and joining me today is a gentleman who is recently named one of the top ten attorneys of 2007 in the United States in the areas of international trade and finance.  His name is John Maalouf, he is with the Maalouf Law Firm.  John, welcome.  It is great to have you with us today.

John:  Thank Janice, it is good to be here today.

Janice:  One of the top ten attorneys in the US.  You are number 5 actually, I understand.  That is quite impressive.  Congratulations.

John:  Thank you.

Janice:  Now, I also understand that you are a member of MENSA with an IQ that puts you in the range of genius. Isn’t that true?   

John:  Yes, that is true.

Janice:  So why don’t you tell us how it is that you put your genius to work for your clients.  What exactly do you do?

John:  Well, we represent companies in all aspects of corporate law from IPOs to MNAs to private placements.  We represent fortune 500 companies as well as small start-up companies and mid-ranges companies.  Private placements, MNAs, that sort of work.

Janice:  All aspects of corporate law then and finance.

John:  Yes, that is right.

Janice:  Exactly.  Now, um...gives us some idea of maybe the different types of companies that you work with.

John:  Well, we represent large publicly traded companies in different types of deals.  Mergers and acquisitions, hostile takeovers, IPOs.  We also represent small companies... start-up companies, and a lot of times we’ll have two or three individuals who have a great idea, some initial financing and ready to get their company off the ground.  Other times we represent mid-size companies.  They’re growing and doing well, but not quite yet ready for an IPO and we’ll help them get money through doing a private placement.  They can raise $5 million or $10 million dollars in capital without having to register with the FCC and, hence, there are no 10Ks or 10Qs or 8Ks or Sarbanes-Oxley issues to be concerned about.

Janice:  What are some of the mistakes that smaller companies might make when they are just getting started that had they come to you, you could have saved them a lot of time, trouble and maybe even money to begin with?

John:  Well, often times, principals of a small company are friends and they think, well, we will do this on a handshake and things will get worse as they go.  One common problem we see is in the funding among principals of this type of company.  There is misunderstandings and they have different expectations as to what their respective duties are and what they are each entitled to.   If they’d come to an attorney to have it structured properly from the beginning, these misunderstandings wouldn’t happen.  Frequently, we’ll get clients who have been in business for a couple of years and the misunderstandings have already happened.  There is fighting among the principals and often times it becomes a very lengthy and expensive process to litigate or arbitrate the matters, and sometimes they actually end in the destruction of the company. 

Janice:  So, the lesson is to do it right from the very beginning and really invest in the kind of services that can help your business succeed.

John:  That is right.  Finance is a lot like skydiving.  It is something you want to get right the first time.

Janice:  (laughs) That’s a good way to put it.  You only get one good chance on that one.  Um...your services...uh...you are a leader in the financial services industry from what I understand and you even have a moniker...you are known as the Ideas Man.  Where did that come from?   

John:  Many years back, one of my clients...pinned that moniker on me and it just kind of stuck.  I have the ability to come up with ideas where other lawyers have been unable to.  To see solutions other people can not see.

Janice:  So, give us some examples there.  What type of...somebody comes to you and someone else has told them that it just can’t be done, yet you do it.  What type of situation might that be?

John:  Well, we had this one situation a little while back where a client had been to a law firm with 1,000 attorneys.  They had spent about three months on the matter, staffed it with six attorneys, and billed the client close to seven figures only to come back to tell them that it couldn’t be done.

Janice:  After all that time and all that money.

John:  That is right.

Janice:  And so what could you do for them?

John:  Well, they came to me and they told me about the transaction.  It was interesting, and it had never been done before.  It was a unique situation.  So, I spent three days doing the mental gymnastics figuring out how to structure it.  About four weeks later, we had the deal structured, negotiated and completed with the help of one associate using none of the work the other firm had done. 

Janice:  Brilliant.  I bet your client was thrilled.

John:  They were pleased. 

Janice:  You’re a corporate boutique law firm.  Describe for us specifically what that means.

John:  Well, we represent clients in all aspects of corporate and finance law.  From private placement and IPOs to MNAs to structuring the bylaws or the operating agreement from the beginning just to make sure the company is set up properly at the beginning stages. One reason to make sure that a company is set up properly at the beginning is to avoid your client or your company from a hostile takeover.  We had such a situation a little while back where we had a friendly merger set up, but the board of directors of the charter company got unreasonable.  They got greedy, and so the friendly acquisition turned into a hostile takeover.  We commenced a tender offer and within a couple of week the board of directors of the charter company realized that there was no way they were going to win this.  They had no choice but to come to us and negotiate and we had a deal on very favorable terms.  I couldn’t help but think at that time, however, that had the tables been reversed...had we been representing the target company, the hostile takeover could never had occurred.  We would had to replace various anti-takeover provisions, poison-pills, crown jewel lockups, shark repellants, but unfortunately they did not have good legal counsel and they suffered the consequences and lost their company as a result.

Janice:  I think it goes to say that a lot of people in their business make the mistake of thinking of...uh...an attorney services as a cost that maybe they think they can’t afford.  Yet it is really an investment that can save them so much in the long run.

John:  That’s true.  For example, when a client comes to me with a transaction, the first thing I do is I listen.  I understand what the client’s objectives are, what they are trying to achieve, and then I analyze the transaction and figure out how can I add value to this?  How can I make it better?  More profitable?  For example, if a client is looking to raise capital, does it make sense for this particular company to issue equity securities or convertible debt securities.  If the company is looking to open up operations in China, is it more profitable, more prudent to enter into a joint venture agreement with a Chinese company, or is it safe and more practicable to open up a whole-owned foreign enterprise, or an emerging acquisition situation.  Does it make more sense to structure the deal as a two-party straight merger or a reverse triangular merger?  And in almost every instance, we not only help our clients achieve their goals, but also to add to the bottom line.  We take advantage of the opportunities that are there and also work hard to make those opportunities happen.

Janice:  So you have offices here in New York and I also understand that you have an office in Hong Kong.  Why China?

John:  Well, we opened the office in Hong Kong about a year ago to service our clients who are investing in China.  Opening up operations there.

Janice:  It is a huge emerging market.

John:  It really is and there is a great deal of potential.

Janice:  Now what kind of...uh...challenge...China is of itself a whole different world and their business practices are very different.  How is it that you help your clients kind of work through that?

John:  Well, one issue we see a great deal are US companies entering into joint ventures into China.  One problem we see frequently is that they’ll enter into a joint venture will they own 51% of the joint venture and they will presume that they have control over the venture as they would usually have here in the States.  Unfortunately, that is not the case.

Janice: Not so there, right?

John: That is not so there.  In China, in order to have control of a joint venture you need to have the authority to appoint the managing director and the general manager of the company.  Those two roles have complete autonomy over running the company. So, a US corporation intent on controlling a joint venture cannot simply rely on owing 51% of the venture or even having control over the board of directors.  They must have the explicit authority to appointment the managing director and the general manager.

Janice:  So there are a lot of things for American business woman and men to learn about dealing with China.

John:  A great deal.

Janice:  A you can help them navigate that path.

John:  Yes.

[Client Testimonials]

Janice:  John, a lot of time when someone is needing legal services...uh...they will visit a law firm, kind of do their due diligence.  A senior partner will greet them, take them out for lunch and...uh...and then you never see them again. The work gets delegated to a junior partner or an associate.  What can someone expect when they contract your services?

John:  Well, I handle every deal from start from finish.  We have an excellent team of first rate attorneys and I’ll assign a particular discrete aspect of a deal to one of my associates, but I handle every deal.  If a client were to call me up at three o’clock on a Tuesday night and ask me “what is going on in my deal”, I can give them every deal.

Janice:  And clients call you up at three o’clock in the morning?  Is that what you are saying?

John: Well, we have clients in almost every different time zone.  So if a client needs a conference call in Hong Kong and 3 a.m., we have a conference call...

Janice:  You are available.

John:  ...for their conference, we are available.

Janice: Excellent. Now, you have...I know that a lot of people want to work with you directly, but not to at all discredit the amazing team of attorneys that I understand you have working with you, so let’s talk a little bit about that.

John:  We have a fantastic team of hand-picked attorneys working for us.  Many of them have many years of experience in the financial services industry.  They speak many languages, including Mandarin and Cantonese, for our clients doing work in China, and if a deal or transaction is given to them, or a part of a transaction is given to them, you can rest assured it will be done perfectly. 

Janice:  You have had amazing success as an attorney...and the years you have been practicing since the early 90s I understand...is that correct?

John:  Yes. 

Janice:  Not only with the firm you started with, but now with your own firm.  What would you say are the principles on which you founded your business?

John:  Well, the ability to see solutions that other lawyers can see.  Many attorneys will work 70 or 80 hours a week but they don’t understand why they are doing it.  We structure the more complicated deals that other firms say can’t be done or are impossible.  We will find new and unique ways to make them happy.

Janice:  I understand, John, that you represent a lot of huge Fortune 500 companies, but what about the little guy.

John:  We represent a number of start-up companies.  We help them get setup properly from the beginning, structure the company properly.  We help them through several rounds of private placement financing.  We can often help them raise 5 million or 10 million dollars in capital without having to register with the FCC, so there are no 10Ks, 10Qs, 8Ks or Sarbanes-Oxley issues to be concerned with.  We also have excellent relationships with some of the nations top-tier investment banks and private equity firms, so we can also help them obtain additional sources of financing as well. 

Janice:  So the whole idea really is to build that relationship that you can work with and since partner with a company throughout their growth. 

John:  Exactly, we grow with them.  We take some companies from their initial stages where you have two or three principals with a great idea and some start-up financing, take them through financing, acquiring competitors, and then through the IPO process.  A lot of people know the IPO process is registering your stock with the FCC and then being able to sell your securities with the NASDAQ with the New York Stock Exchange.  What we do is we draft all of the FCC filings including the registration statement, commonly known as the prospectus.  We also negotiate and draft the underwriting agreement with the investment bank, which will take the company public.  The entire process takes a few months, but once the registration statement is declared effective by the FCC, you have just gone public and you can now sell your shares on the Exchanges.

Janice:  An exciting moment for any company, isn’t it?

John:  Yes it is.

Janice:  What is it that you think, John, your clients appreciate most about you and the work that you and your law firm provides?

John:  Well, we always try to provide cutting edge service and to see how to add value to deals.  Whether it’s additional financing or it’s opening up overseas operations, whether it’s the way you are structuring a merger.  We try to add value and make the deal more profitable to our clients.  We see solutions other firms don’t see and we provide old fashion hands-on service.  If you need me, you got me.  Although we have a fantastic team of associates, the clients get me.  They are not passed off onto anyone.

Janice:  Now the world of IPOs is changing drastically, isn’t it?  There a lot less companies going public here than there are abroad.  Isn’t that true?

John:  Unfortunately, that is true.  About a generation ago, of the world’s 25 largest IPOs, virtually all of them were done in the United States.  Last year in 2006, two of the world’s largest 25 IPOs were done here.

Janice:  Only two?

John:  Only two.

Janice:  That is amazing.

John:  As a nation, we have affectively regulated ourselves out of an industry.  The IPOs are now being done a great deal in London, in Russia and in Hong Kong, and that’s how we opened up the office over there.  To help our clients doing international IPOs and international transactions.

Janice:  There’s a lot of companies that might want to take themselves public, but it may not be the right choice for them or it may not be the right time.

John:  That’s true.  We will work with companies, we’ll see at what stage of development their at and be able to advise them whether or not its the best time for them to do an IPO.  If it is, we can handle it for them.  If it’s not, we can advise them as to other types of finance.

Janice:  You know, John, there are a lot of law firms out there and a lot of them specialize in international and corporate finance.  So, why you?  What are they going to get from Maalouf law firm that they maybe or can’t get anywhere else?

John:  We have been ranked as one of the nation’s top ten law firms in this are, and we have the ability to see solutions that other law firms don’t.  We also provide the old-fashion personal service that other law firms just don’t offer these days.

Janice:  Excellent.  And here you are now ranked as one of the top ten law firms in the united states, so congratulations and we wish you much continued success. 

Offering a comprehensive range of legal services that help you seizes opportunities and get the deal done.  That is why companies large and small rely on Maalouf Law Firm.  Reporting for Close-Up On America’s Business from the American Stock Exchange in New York City, I am Janice Marie.

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