Episode – 15

Lynne Bolduc Premier Securities Attorney With Structuring Over $1 Billion in Business Transaction

Description

Lynne Bolduc is Partner of FitzGerald Yap Kreditor. Over the past 25 years Lynne has established herself as one of the premier corporate and securities lawyers in California. She has structured and implemented over $1 billion of business and financing transactions, and has represented both domestic and international clients in complex transactions across multiple industries. She represents both private and public companies, as well as investment banks, broker dealer firms, registered investment advisors, venture capitalists, private equity funds, and other financing companies.


Lynne talks about her experiences as a corporate and securities attorney. She also talks about the current deals that she is working on and what the COVID-19 situation has done to the markets. She is well versed in M&A, raising capital, Reg A+, IPO's, and more. Hearing the unique perspective of a lawyer that is in the middle of the deal making process brings a wealth of information that you wouldn’t want to miss!


What You Will Learn

- Lynne’s unique perspective on the virtual road show

- The differences between a firm commitment and a best efforts basis IPO

- The importance of trusting your gut- The one clause that should be in every contract


Connect with Lynne:

LinkedIn

Full Transcript

JP Maroney:

Hello, and welcome to another episode of the deal flow show. I'm JP Maroney, your host, along with Paul Nicoline, my cohost for this episode, and we have a very exciting guest. We have Lynn Bolduc from Fitzgerald, yap, and creditor from, and, uh, we we've got some excitement because you've got some deals that have just really premiered. And in fact, we had to reschedule the original interview because some exciting things are going on. So I'm kind of excited to jump into that and learn a little bit more about it. But before we get started, if you could just tell us a little bit about your firm and the work that you do today, the scope of the work that you do.

Lynne Bolduc:

Sure. Yep. I'm a corporate insecurities attorney. I'm a partner at my firm and I am the chairperson of the firm's corporate insecurities department. My firm is a business law firm. They won't divorce you or get you out of jail, but they'll do everything you need for your business. So employment tax litigation, and then of course, corporate insecurities, which I handle. So I handle primarily transactions, whether it's a merger and acquisition, a private placement of public offering. Uh, my background is working in house legal and compliance at investment banks. That's where I learned how to do deals. And then I cut my teeth as a lawyer during the.com boom, and did a ton of deals. Then I've been practicing now. All I've been practicing so long. I'm finally good at it. It's been about 25 years.

JP Maroney: 

Very good. Wonderful, wonderful. What made you go into law then?

Lynne Bolduc:

Oh, I started working at my father's law firm when I was 15 years old. So when I say I've been doing it all my life, I really have.

JP Maroney:

So talk, can you talk a little bit about, so, um, one or two of the deals that are kind of right at the tip of your tongue, because they're active and I know you were involved in an IPO that either happened last week or this week. I don't know what all you can talk about, but you know, this is the deal flow show. So we'd love to hear about your deal flow.

Lynne Bolduc:

Sure. Um, I had two IPLS pending when the whole pandemic hit in March. I thought both of them would get postponed. Neither one was postponed. The first one was a reggae plus that was qualified and they're currently out raising money, but the more exciting one was a full blown firm, commitment IPO under and by two major wall street banks, they were ready to go effective right around March, April and that's of course, when everybody went on lockdown. So we didn't know how we were going to do the roadshow companies based in Washington state. They're in the real estate industry, they are a custom home developer. Well, nothing was postponed. We would on the road show, the CEO did about 65 virtual roadshow presentations, never got on a plane. Once we went effective. Last Friday, we closed yesterday, they raised the maximum and they filled the green shoe completely. And the deal got done.

Paul Nicolini:

That's terrific. That really is. Can you speak of the difference between a firm commitment and a best effort spaces,

Lynne Bolduc:

A firm commitment IPO. Those are rare, at least in the small cap world because in a firm commitment, the underwriter, the investment bank buys the shares themselves and then at a discount and then sells them at the full retail price. That's different than a best efforts because in the best effort to deal, the underwriter agrees to use its best efforts to sell the shares. So there's no real amount. Let's say the maximum offering is $50 million. Well, I'm going to use my best efforts to try and sell $50 million worth of your stuff that may or may not get that. But if it's a firm commitment for 50 million, they're giving the company a check for $50 million less, there are discounts and it's a discount and a firm commitment versus the sales commission, because remember they're not selling, they're buying at a discount

Paul Nicolini:

As rare as they are. What are the factors in this deal or others that get a firm commitment that tend to put them into that category

Lynne Bolduc:

Steel in particular, the company is of course revenue generating they're profitable EMP. They had a lot of plans for the future. They have a lot of acquisition targets and they're on pace to do a secondary financing, even though we just closed their initial yesterday, but they're in the real estate industry. And that's something that I've noticed for deals during the last 25, 30 years, I've been doing them. It's whatever is hot in the economy, trending touch where the successful deals happen. For example, you know, 25 years ago, everyone was doing.com. Then we sort of did a lot of oil and gas deals. Life sciences then got real popular. Those are still popular today, but in the last few years, say three, four or five years, I have done more securities transactions, private in public, in the real estate industry than in my entire career. And as you noticed real estate improved during the pandemic, I mean, everybody wants to buy a house now, but in the country, but that's really why this company got a firm commitment. It was trending like the brokers, like say it had sizzle as well as fundamentals.

JP Maroney:

Can you share how, what the max on that one?

Lynne Bolduc:

The matchless $12.5 million. That's another reason why it was it got done. It wasn't something insurmountable.

JP Maroney:

You mentioned that this, the, the company, uh, did 65, you said 65 virtual presentations prior to the offering. So how is that part of how COVID has affected? Can you talk about that? How is covert really affected the capital markets and the process of going public?

Lynne Bolduc:

Well, people who did not want to do things virtually the old school, people that liked to do things in person and a handshake deal, they were actually forced to do things virtually or their deals didn't get done. Or there was some embraced it. Some still don't like it. I know I have one older partner at my firm. He doesn't like it has to have the secretary set it up for him, but even he was forced to do it. So what we found in my IPO, 65, 65 roadshow presentation, I don't know if you ended up done 65 roadshow presentations in person, it would have taken so long. I don't know if you could have all done it in New York. It would've been a lot of travel. There would have been a lot of it, all of the meetings and dinners and lunches, everything. So that really changed. And I think it's gonna stay that. We'll still do things in person, but we're going to do a lot of things virtually because it's easier and it's less expensive and it still gets the deal done.

JP Maroney:

That's very cool. And you know, with the, the landscape changing, I wonder how much it will go back to the way it was before. If this is going to stretch the rubber band and people will now obviously look to, we can cover more ground in less time for less money and less drain on our resources. Um, and be able to get something across the finish line. As you watched this, I don't know how involved you were in the planning and execution of the road show, but at least as being part of this and seeing it from your perspective, what are some of the tips or things that you would suggest anyone that's going to plan something similar that they would want to have in their arsenal of things that they'd want to pay attention to, or that they'd want to make sure they have in place to be successful with a virtual road show?

Lynne Bolduc:

Well, it's the same thing as when you did them in person be prepared, but what is virtual be prepared from a technology perspective, practice set up, have a fake meeting because technology issues, it can be embarrassing when you're in front of, you know, a big investment bank. So all of that needs to be ready. And of course we do have that. Now we have to say the culvert disclosure is one thing. The question always came up. How has Colbert affect your business? In my client's case, the real estate, it actually helped, but don't forget that. I mean, got to say, you know, a little bit of the bed, as you know, my mom used to say, you got to take the bitter with the better. So don't shy away from talking about COVID. We all know what's there. We all know it's a risk. It's okay to mention it. Something interesting that happened, not with my deal, but the sec issued a lot of letters about priority to companies that started blaming everything on COVID because they were using it to cover up their real negative financial results that were as a result of something else, not COVID. And they said, you know what, you're blaming it all on COVID but we think it's something else. So don't over disclose. Don't blame everything on COVID beyond

Paul Nicolini:

Lynn, can you speak a little about the reggae process versus a traditional IPO? And do you see reggae's more often now I know in the years past it was sort of a new way to come public. Uh, can you speak about that reggae's versus your traditional IPOs?

Lynne Bolduc:

It's interesting. Cause I hadn't both at exactly the same time so I could prepare, uh, the reg a plus flew through the sec. I was shocked. We had two or three rounds of comments and they were done comparatively speaking, the S one, remember now the S one was going to be listed on NASDAQ in the reggae pluses on the OTC. So you have more issues, but the [inaudible] process took about six to nine months to get through the sec they needed full blown audited financial statements. They had a full review. You had an FINRA review because we had two underwriters. She had the NASDAQ review. Then you have the sec review. So sort of like conducting a symphony orchestra. You've got to get all the players to play all at the same time and the same note. So it took longer, it costs more money. However, bottom line, the reggae plus steel, they're still out raising money and they've been doing it since June. The [inaudible] deal. It's done the results. I don't know. Maybe the proof is in the pudding reggae plus is faster cost less, but the results may not be as good as the regular process.

Paul Nicolini:

Do you see the reggae? Do you see the reception from the broker dealers with the reggaes becoming larger as we get further along in the process?

Lynne Bolduc:

Yep. There is an underwriter on the reggae plus that I was working on only one, not two, and it was the best efforts, but if we can do deals faster, easier, less expensive. It's a great thing. But the problem I see with the reggae plus is that they can't go directly to NASDAQ or the NYC American or, you know, a stock exchange because they're not a reporting company. They have to file reports, but they reports by file only qualified to be on the OTC to be market. So if you want to do a reggae, plus you're going to start off on the OTC market and then you have to become a reporting company and uplift to the NASDAQ or at the NYC American. So that's sort of, you know, a little bit of a hurdle and a two step process to getting to a larger exchange in the reggae plus

JP Maroney:

On the IPO. Is, are you seeing the fulfillment or the purchases of these shares coming mostly from mom and pop retail? Or is it more institutional or family offices or where are you seeing the biggest movement and the money in the capital markets?

Lynne Bolduc:

It's institutional and family office. I'm seeing a lot of retail interest in private placements. We of course do private placements as well. And I have one, they make a sanitizing product, they made it before, you know, anybody even knew what COVID-19 was that one shot through the roof. It's all, it's like individual investors think the market's too high don't trust the market too volatile. So they weren't investing in the public offerings, but they still had money. They wanted to invest. So they had invested privately in the IPLS. We did, it was all institutional and family office.

JP Maroney:

That's interesting. Are the product, the one that you did with the private placement or the private placements you're handling? Are they more, are they raising equity? Are these yield like, you know, uh, debt products or what sort of thing are they

Lynne Bolduc:

Just plain old vanilla, common stock? I also do have something interesting too, that happened during the pandemic. If you want to talk about private deals, um, I represent a lot of PE funds and special of them have pivoted during the pandemic. For example, one fund is big into the hospitality real estate. They would build hotels from the ground up or buy a hotel, renovate it and run it in. You know, they're a fund that is in the hospitality sector. Well, what happened to the hotels during the pandemic, of course all became distressed. So my client dropped all their funds pivoted made to distressed asset funds. And that was a whole new plan. It'll hold two new offerings that we're going to go out. Now, we're going to acquire all of these distressed hotels, renovate them, rehabilitate them, and then come out when the pandemic is over with this beautiful new hotel was going to make, you know, a billion dollars. So, and distressed asset fund is now a popular thing in the PE world.

JP Maroney:

Very interesting. Let's talk a little bit about the deal flow process in just a moment, but if you're watching or listening to this episode of the deal flow show, you can get access to more episodes and also subscribe and follow us to get future episodes by going to the deal flow show.com. Um, you know, Paul, we've talked a lot about Harbor cities rollout to the broker dealer community. Um, you mentioned LAN the acceptance of some issuers or maybe sponsors of this virtual process or non-virtual process. How are you seeing an evolution? Not just from COVID, but an evolution of the deal making process in the digital space today? What, what changes from using technology platforms and things like that from the old school way of doing business

Lynne Bolduc:

In a way it makes a lot more emails because now it's not, you're not sitting together working on something or making changes and going back and forth. So I think the workflow has, is a little more intensive. It's a little more challenging from a document perspective to collaborate on things. A lot of people have been slow to adopt, you know, screen sharing. So I can sit here and point at this word you might want to change. And all of that, that has been a challenge. The rest of it has worked very well. I think that people are able to do things quicker using the technology. You don't have to wait for people to fly around. Um, due diligence was always done. You know, you put all the documents in your data room, then the underwriter and all of the selling group members review them. That was sort of always online. So that really wasn't new at all, but it's been the collaboration. That's been a challenge, a lot of emails and phone calls, and we could probably all get better at using virtual meetings and sharing to collaborate. But I think overall it's been help and not a hindrance because I think we've been able to get more done this way because we don't spend time and money traveling

JP Maroney:

In that process too. Some of the personal touch gets lost, right? Because it's mostly virtual. So it's hard to kind of feel somebody get a feel for where they're going with a, with a deal. But you know, it's interesting because Harbor city, we've got people all around the world that we work with and we have team members that are on our team that actually I've never met in person. And a lot of people and strategic partners. We've done business with investors. Who've put capital a mill. We've got people that we've just never, but I, I grew up kind of in that world. So back in 2002, I kind of went full time, building businesses primarily on the internet, long before Harbor city was even a thought and we were doing teleseminars back in the day when you would put 25 to a couple of hundred people on a teleseminar what, you know, public companies do conference calls, right? Um, for their stockholders, very common, but we were using them for a pitch or a sell and, and it was working and then migrated to the virtual world. So it's really interesting to see everyone else being forced to catch up with that in this, in this new changing pioneer, I was back in the day when, uh, then what's, uh, tell us a little bit about when you're working with either a sponsor or other people, what are, what are deal breakers for you?

Lynne Bolduc:

When things don't match, you can sort of tell that something is wrong in a deal. And a lot of it is gut instinct. I think the biggest mistakes I've ever made in my career was not listening to my gut saying something is wrong here. Can't tell what it is. One example is back in the day, when we actually had personal meetings, we were doing an IPO for a company and nobody had ever met the underwriter. They had an address on wall street and you know, the deal goes on. So we talked on the phone, we processed everything. We went effective. And then we didn't know what happened. My client never got any money. We couldn't get ahold of the underwriter client actually got on a plane, flew to New York city, went to the underwriter, his office. It was a door with a little window next to it.

And when she looked in the window, there was a folding table and a chair in the office. And there was no one in it, proof story we should have known there wasn't it was, they couldn't raise any money. I don't know what they were doing, but you sort of get a feeling that something isn't, something's a miss, you've got to trust your gut. So when things like that happened, you know, look into it, do your due diligence and not just in paper, something else. That was interesting, not necessarily virtual, but in a private placement that I represented the managing dealer on. Cause we also represent, you know, the banks themselves, cause I've experienced doing that. I had to fly out to Trinidad. It was an oil and gas deal. And we flew out to Trinidad where the company was located to do our due diligence site inspection.

So we would go out there and there's oil all over the ground. The people in Trinidad have to build their houses on sticks because oil will come into your house. So we're all very happy. Cause there's oil everywhere. We go out to the field and they turn on the spigots and oil comes out, everything looks great, right? So we proceed with the deal. We raised a bunch of money and guess what? We can't produce the issue. We're can't produce the oil in commercial quantities. It is so expensive because the oil that came out of the ground was chunky and you had to steam it and make it discuss. It costs too much money. They never made a dime. We all lost money. So don't take things at face value. That's the moral of my story.

JP Maroney:

How do you respond to setbacks and failures for yourself? When a deal doesn't go like it should, or a relationship in business doesn't work out or a project accompany, anything like that, where you hit the wall, what is your process for mentally working around that? And continuing

Lynne Bolduc:

You learn from every failure and disappointment that you have. Don't judge a book by its cover. Don't take everything at face value. If something smells funny or seems odd, it is odd. There's a problem. So it's just the same, you know, I guess it's all just chalk it up to experience. It's disappointing at the time, it's particularly disappointing for me in that oil and gas deal because I personally invested in it too. So I don't do that anymore, but you have to learn from it and move on. There's another deal right around the corner.

JP Maroney:

What I'd like to get into in just a moment is sort of your preparation or deal evaluation process. But if you're watching or listening to this episode of the deal flow show, you can get access to more episodes and subscribe or follow us to get access to the future episodes. As we release them, by going to the deal flow show.com. So we've got Lynn bulldog with us today and we've been going through some, some as you've been listening, some of her own personal experiences you put together when you're putting together a deal. What is your process? Um, do you have, you know, a checklist or how do you evaluate other than that gut check, which I think is super critical and comes probably strengthens like a muscle with every bill that you do, but what is your process for evaluating the deal flow or as you're working, maybe with other deal makers, what do you recommend as a process for evaluating those opportunities?

Lynne Bolduc:

Companies listening out there or repaired their corporate ducks in a row, you underestimate the value of your minutes meetings, your corporate records, having your signed contracts. That is a very intensive process to get everything. And I'm going to writer or managing dealer or needs for their due diligence requirements or FINRA have it before you have the meaning of all your minutes, have all your signed agreements because they're going to ask you, and if you don't have it, you have to go create it takes time and then they lose interest. Can you use in the preparation, if you're prepared here, once you're ready for a private public, it doesn't matter yet. They have to do due diligence on the private placements as well. It doesn't matter if they're 1 million or a hundred million dollars, how all of your corporate ducks in a row be prepared, then the banker will, will move forward with the financial analysis.

So that's my best advice. People underestimate that. I had a position that was pending. It closed in everything. So it started about January. It was a $50 million acquisition of a private company with a bank on it. And this company had been in business 30 years. They had never done anything. They never did anything. They just kept on doing their business. And it was very successful. But when it came time to sell it, it was delayed. A mass, it got delayed because there is a lawyer or the buyer and they're demanding all of these records. They had never issued stock certificates. It was incredible. We were there every night, creating all these documents and it really was not necessary. It almost blew the deal because all the time it took all the expense. It took the buyer almost walked away.

Paul Nicolini:

The devil is in the details right? In the preparation. Yes. Len tell us why you, uh, or why someone would go to you for your services in the deal making process.

Lynne Bolduc:

Personally, I got my start working in house at investment banks before I was even a lawyer. I know what the banks want. I know about their due diligence process, which we just talked about. I know how they want their documents to look. And I know how to sell a deal. This all benefits the issuer, for example, in a prospectus or a private placement memorandum, it's a balancing act. Yes, you have to have all of the legal disclosures required. However, you have to make it attractive. It has to sell the deal. If the deal doesn't sell any money you spent on a lawyer was wasted. So you see these documents and they have just boilerplate risk factors and they go on and on. They're not even a flickable, it's not attractive. It doesn't highlight the benefits of the company and why you should invest with the risks of investing. There is a balancing act there. And I learned through working with investment banks, how to, you know, walk that tight rope between selling a deal and being, you know, legally protected because it's an insurance policy as well, of course, for investor lawsuits. But it can't be like, you know, chicken, little, the sky is falling because it's not. So that's the, I think the biggest unique service offering that I have is I know what the bankers want to see in a deal.

JP Maroney:

What kind of people would you like to connect to connect with from our audience and our other guest speakers?

Lynne Bolduc:

Um, my target client is any company that wants to pursue a transaction. I'll give you an example. My favorite client was a brand new baby startup company. We literally formed their corporation. We got them, all their employment agreements, all of their contracts, their licensing agreements, distribution, et cetera. They were in the pharmaceutical industry. We took them through three rounds of private financing and AB and C. During that time they got approval to sell their product in Mexico, B round got approval to sell the product in Europe, see railed sold the product to that in the U S and got FDA clearance. Finally, after those three private rounds, we took them public on NASDAQ with two major investment banks. They went public in 2007. They're still public today and they're still my client. That's my favorite client. I will look at startups, many lawyers don't but when you look at a startup and help them, maybe it'll make a lot of money at the beginning. But look at it. I've represented this company for 20 years now. I've made a lot of money on them and it was easier because I helped them to structure from the beginning. It was, you know, made me very happy because I got to see the whole life cycle of a startup company whose success, which can be rare. But that's my target client. Any company that wants to grow, wants to do a transaction, wants to buy another company, sell their company, raise money, go public.

JP Maroney:

Just out of curiosity. What was the timeframe between when you all started the first fundraising and when the company finally went public,

Lynne Bolduc:

It took seven years, seven years. Very interesting.

JP Maroney:

Well, if you're listening or watching this episode of the deal flow show, I'm JP Maroney. This is Paul Nicoline. And if you are looking for additional episodes, you can get our archives as well as follow us or subscribe to get future episodes. By going to the deal flow show.com. We have a great guest on Lynn Bolduc with us. And you want to wrap it up with our final question? Yeah. Lynn, can you share with us something that, um, the business community wouldn't otherwise know about yourself?

Lynne Bolduc:

I could give them a couple of tips. Uh, number one, right now examine your forced majority clauses in your contracts. Make sure they include pandemics. That became an issue when this whole thing hits force majeure clauses, excuse nonperformance of a contract. Um, a lot of them didn't cover the pandemic, the lockdown, the government restrictions examine those in your contracts. Use them moving forward. Another thing that I think is a great tip for companies right now is a business continuity plan, a BCP. What happens if there's another disaster? What happens if the lights go out? What happens if there is a fire and you can't go to your office, how are you going to work virtually? We've pretty much all done it. Now we know how it works. Have a business continuity plan in place now and ask your vendors. If they have one, for example, I mean, how are they going to continue to provide services to your company if there's an earthquake in their office to shut down. So that's a couple of tips that I think businesses should be thinking about and implementing right now.

JP Maroney:

If folks wanted to get in touch with your land, what would be the best way for them to reach out for you?

Lynne Bolduc:

Just give me a call or send me an email. I'm happy to talk with anybody and, you know, have a good discussion about what your possibilities are for your transaction. My phone number is (949) 788-8900. My email is my first initial L my last name, B O L D U c@fyklaw.com.

JP Maroney:

Excellent Lynn. We really appreciate you being on the show. Uh, once again, if you're watching or listening to this episode, you can connect with us@thedealflowshow.com on behalf of Paul Nicoline, myself, JP Maroney, LAN, thank you so much for coming onto the show and sharing with our audience and giving back from your storehouse of knowledge. We'll see you again in another episode very, very soon. Take care. Thank you so much then

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