Navigating Large-Scale M&A Deals and Legal Complexities

How to Navigate Large-Scale M&A Deals with John Orbe

Entering the M&A World

John Orbe: I feel very blessed as an M&A-specific person, an M&A lawyer, to be at a company like Emerson, where we're doing amazing M&A. All the types of things you mentioned—from public takeovers to a $14 billion divestiture of about a third of our company and all the cross-border deals around the world.

For a kid born and raised in St. Louis, to be able to sit here in St. Louis for a Fortune 500 company and do M&A work—legitimate, interesting, challenging M&A work—around the globe, of all different sizes, is really a blessing. And I love being in M&A at Emerson. It's a company that’s 130 years old, but really, M&A is its backbone. We’re always doing deals, always looking at deals.So, it’s a great place to be in the M&A space.

Kison: I’m like you—happy to be part of the journey, even though I’m a much, much smaller part of the journey. But can we kick things off with a little bit about your background?

John Orbe: I started my career in private practice at a big law firm, an AmLaw 100 firm. How I got into M&A—I fell backwards into it.

I graduated law school during the Great Recession, and I had done a summer associateship at my firm, but as a lot of large firms were doing at the time, my start date was deferred for quite a long time. So I was sitting there, waiting to start. At the time, I thought I was going to go into litigation. That’s what I had been working toward in law school. That’s what I thought I’d do. Then they called me almost a year early to start, and they said, "We’ve got a spot for you. You have to do corporate M&A. Do you want it?" And I was like, "Yes, I want a job. Also, what is M&A?"

I vaguely knew what M&A was, of course, but it was not my bread and butter, not what I’d really been trained on. But I wanted a job, so I took it. I was in a corporate law group at this large law firm, so I did lots of stuff—general corporate work, corporate governance, commercial agreements, capital markets, securities offerings, different Securities Act compliance. But the thing that I found that I loved was the M&A work. Over the years, it became my primary focus.

I just loved the deal work—the strategy, the intellectual stimulation, the game planning, the preparation for negotiations, going into the negotiations. And then, you always have those last couple of days leading up to a signing or closing where it’s really crunch time—lots of late nights. That’s when I get into the zone. Some people don’t like those high-pressure situations, but that’s when I feel like I’m at my best. M&A really provided that stimulation, and I just fell in love with it.

So I was at my law firm for almost eight years, doing all kinds of corporate work but mostly M&A. Over that time, Emerson was actually the client I spent most of my time on.

(00:05:26) M&A as a Team Sport

What happens a lot of times to lawyers is that your client then has a need. So, I saw Emerson had an opening to do full-time M&A. For a St. Louis kid, full-time M&A at a Fortune 500 in St. Louis? I jumped at the opportunity. So I switched from the law firm to in-house a little over six years ago, and I’ve loved it. I’ve been doing M&A for about 14 years altogether.

My background—I’m an athlete. I played football in college, and M&A gives me that same rush again. It’s like being an athlete—working with a team, that goal in mind, and then you’re at the end. It all comes together like you’re playing a game, and then you get the result. It’s such a rush to get that deal signed or closed. It’s fun. I love it. I’m a junkie.

Kison: That’s what happens when you get into M&A.

John Orbe: Yeah.

Kison: I like that analogy with sports, though, because you’re right. It is teamwork. It is high pressure.

John Orbe: Game planning, doing all the work and preparation. It’s a good fit.

Kison: Did you feel that more so when you went from external counsel to in-house?

John Orbe: Obviously, you have the teamwork when you’re in a law firm, but it goes up to another level when you’re in-house because you have so many cross-functional teams and touchpoints. To go back to a football analogy, you’re almost like the quarterback—you’re bringing it all together. I sit at the intersection of all the different functional teams, whether it’s IP, HR, tax, or finance.

Your teamwork and your ability to work cross-functionally go up to another level. Even at the law firm, you go cross-functional, but you’re dealing with all lawyers. Here, you’re dealing with people who aren’t necessarily always lawyers. That changes some of your language. Sometimes, you have to explain things not just in legalese. You have to learn how to assess business risk and be a little more pragmatic. When you’re in-house, it’s a different challenge, but I think the teamwork skills go to another level because you’re working with lots of different people in different functions who aren’t necessarily lawyers. It’s been a real joy to get that experience.Helpful context. Yeah.

Kison: And that lets us throw in a quick disclaimer. John’s a lawyer. Anything he says is a personal opinion, nothing associated with the companies he’s affiliated with. None of this is investment advice. None of this is legal advice either. Don’t listen to any of this. This is all just made-up stuff.

He’s also a customer of DealRoom too. I’ll put that out there—for like, what, six years now?

John Orbe: Yeah, we got on DealRoom not long after I started here. So it was probably about six years. And we love DealRoom. We use it all the time. It’s a great tool for us.

Kison: He’s paid to say that. Yeah. So that’s all. All disclaimers are out there. And by continuing to listen to this podcast, you agree not to sue anybody for anything. Do you prefer big or small deals?

John Orbe: Ooh, I'm an M&A junkie. So I kind of like all the deals. I really like cross-border deals, especially when I'm dealing with a jurisdiction or a place that I haven't been before or touched before. I get to learn new things when you have occasion to travel to a new country to work on a deal. That's really enjoyable.

John Orbe: Love working the big deals too because they're just so complex. They get the headlines, and it's fun to see something you've been working on pop up in The Wall Street Journal or something like that. But I really do like them all. They all present their own challenges. It's easy to think that the bigger deals are harder and the smaller ones are easier.

(00:10:35) Differences Between Large and Small M&A Deals

‍Kison: Is that the main difference between dynamics and challenge if you look at a large-scale deal? Let's take away the cross-border part. We'll bring that up separately. Just large-scale versus a small deal. Do you think that's what it really comes down to—the sophistication of legal counsel on the other side?

John Orbe: On the negotiation part, yes. I will say on a big deal, particularly on the divestiture side, there is a lot of work, especially if you're doing a carve-out. You really have to get your arms around the perimeter of the transaction. It takes a lot of work to figure out what contracts are in, what assets are in, and how you split out correctly.

John Orbe: The smaller ones can be harder too, particularly if you have a counterparty who's—maybe it's a founder—maybe they don't have regular counsel, so they hire their buddy down the street who might be a traffic attorney or a divorce attorney, not an M&A attorney. That presents its own challenge when you're dealing with a counterparty that doesn't know the market in M&A and what's customary and how M&A deals are done.

Kison: How does Emerson decide which deals to pursue and allocate resources towards?

John Orbe: We have a whole strategy department here. That's their job—to decide what we go after. I'm more of an execution guy. I do what they tell me. They pick it, I make it happen. In this day and age, especially with the regulatory environment, there are more and more regulations coming out that you have to navigate. So we want to be aware of potential regulatory risks or be able to identify those for the team. We also want to help negotiate the LOI to ensure the right provisions are included.

Going back to smaller deals, I can't tell you how often we negotiate an LOI with the counterparty, but the counterparty didn’t even use legal counsel. Then, when they hire counsel, the lawyers come in and say, "Well, they didn't have counsel for that LOI." To avoid that situation, we prefer to be involved in LOI discussions early to ensure all the right terms are in place. The sooner you can get your M&A legal counsel involved, the better.

Kison: I’m one of those people who can be bucketed as "trigger happy." I just want to get an LOI out. I already have the template. I just want to fill it out and get to a point where I know we’re going to agree on price and other terms. So I’m not going to do that anymore. Instead, I’ll call my friend John and ask him to take a look at it.

John Orbe: My legal advice is—get a lawyer.

Kison: Okay. But let’s role-play this out a little bit. Instead of me just sending the LOI, then you getting mad at me, I call you up first and brief you on the deal. You’d probably still tell me I should have told you earlier. But what are the key things you would weigh in on that a deal person might not consider?

John Orbe: Every deal is different—standard lawyer answer, "it depends." But some of the key things to look out for include:

• Escrow or holdbacks: Is the entire purchase price paid at closing, or will there be holdbacks?
• Reps and warranties/indemnities: One party may expect an "as-is, where-is" deal with limited recourse, while the other expects indemnities.
• Consulting or employment agreements: Will there be agreements with key people as a condition of closing?
• Conditions to closing: Are there specific financial or operational milestones that need to be met?

The LOI is a good time to address these issues upfront so they don’t cause conflicts later.

Kison: That makes a lot of sense. So things like escrow, holdbacks, reps and warranties, and key employment agreements should all be clarified in the LOI. What about cash balances and financial assumptions?

John Orbe: Yes, that comes up. If a purchase price is set, it’s usually conditioned on due diligence verifying the EBITDA, revenue projections, and lack of major red flags (e.g., lawsuits). It’s a good idea to specify these assumptions in the LOI. If something unexpected comes up in due diligence, you can say, "That was our price, but it was based on these assumptions, which didn’t hold up."

Kison: If the target company claims they’ll have a record quarter, and they use that to push the price up, can I put that in the LOI?

John Orbe: Yes, exactly. If the deal is contingent on specific financial performance, put it in the LOI. If they don’t hit those targets, you have a basis to renegotiate.

Kison: What’s the wildest thing you’ve seen in an LOI?John Orbe: I’ve personally seen standard deal terms, but I’ve heard stories of founders requesting things like sports tickets or other unrelated perks in an LOI. Those things usually don’t make it into the final agreement. If we’re splitting between an earn-out and owner financing, or if the deal is contingent on third-party financing, should that be in the LOI?

(00:15:42) M&A Deal Strategy and Business Risk

John Orbe: Absolutely. If you're a seller and you don’t want the deal conditioned on financing, say so upfront. If there’s an earn-out, outline the metrics in the LOI to avoid post-closing disputes.[00:18:08]Kison: LOIs are usually non-binding, but are there any provisions that should be binding?[00:18:25]John Orbe: Yes, LOIs are typically non-binding, except for:

• Confidentiality: The parties agree not to disclose the deal.
• Exclusivity: The seller agrees not to negotiate with others for a set period.

Everything else (price, assumptions, etc.) is usually non-binding

Kison: When do breakup fees come into play?

John Orbe: For transformative deals that require significant resources, there may be reverse termination fees or breakup fees. The LOI is a good place to introduce the concept, but the actual terms will be negotiated in the definitive agreement.

Kison: What does the legal team look like at Emerson, and how do you manage deal volume?

John Orbe: Our legal team is lean. It’s just me, one other attorney, a paralegal, and an assistant. Our corporate development team is three times as large. We flex resources by pulling in attorneys from other internal departments or using external counsel on a secondment basis.

Kison: Do you prefer to delegate certain tasks to external counsel?

John Orbe: Yes. We use external counsel for big deals, especially for drafting and negotiating major transaction agreements. They have more exposure to market terms and can help navigate complex transactions.For due diligence, we’re trying to do more in-house or use lower-cost vendors because it can be expensive, especially with large law firms.

Kison: What’s the best value external counsel provides?

John Orbe: Their expertise in structuring and negotiating transaction agreements. They see more deals than we do and know how to navigate complex transactions. This is particularly useful in cross-border deals where regulations vary widely.

(00:25:10) Legal Due Diligence Process

John Orbe: Cross-border deals are interesting. You definitely need good outside counsel, particularly for the local law aspect. I know M&A, but I'm a U.S. attorney—I know how to get deals done in the U.S. I don’t know the law in every single country around the world. There can be specific requirements for getting a deal done in an Asian country or somewhere in Europe that would never cross my mind to even put on the checklist. External counsel will say, "Oh no, you have to get this notarized, and this has to go here," helping navigate the local law requirements.

Also, I know what's market standard in the U.S., but the market might be different in other countries. Relying on external counsel and local counsel in those jurisdictions to help us understand what’s standard and how to get a deal done in those places is very important.

Kison: Localized expertise in working on the transaction agreement. You mentioned pulling due diligence in-house. Can you give me a high-level overview of what legal due diligence entails? I imagine every company has a bunch of employment contracts, customer contracts, and vendor contracts. Is it just reviewing those, or is there more to it?

John Orbe: Reviewing contracts is probably the biggest and most time-consuming piece. You’re reviewing for unusual provisions, such as non-competes. If you're on the buy side, you need to assess how that impacts your business. Indemnities in contracts are important—depending on the industry, limitations and caps on liability can be critical.

Other key diligence points include:

• Transfer logistics: Does the contract require consent for assignment or change of control?
• Corporate document reviews: Looking at governing documents, shareholder bases, and approval requirements for the deal.
• Board and shareholder minutes: These can reveal discussions about issues like litigation.
• Litigation risks: Reviewing the litigation profile—are they constantly getting sued? Are there product liability risks?
• IP portfolio: Ensuring adequate protection, checking for gaps, and verifying proper invention assignments.
• Employment side: Reviewing contracts, benefits, and associated risks.
• Tax compliance: Making sure there are no hidden liabilities.

Contract review is what people typically think about, but due diligence is much broader than just contracts.

‍Kison: I'm going to stop underestimating the value of legal counsel. That’s a lot of little things that add up. Some of these issues seem very cross-functional. For example, employment agreements might require HR involvement.

‍John Orbe: Absolutely. I’m lucky at Emerson because we have specialized attorneys in different functional areas. I don’t personally check the IP portfolio—we have an IP attorney. We have tax attorneys, HR attorneys, and litigators who all get involved. It’s not just the M&A legal team; different lawyers from various disciplines contribute to the process.

‍Kison: Talking about cross-border deals—are all the big deals you’ve worked on cross-border?

John Orbe: Yes, in some capacity. The main genesis of the deal is usually U.S.-based—typically a U.S. seller with a U.S. buyer or vice versa. But at the scale we operate, there are always international components due to subsidiaries around the world. Even if the deal is U.S.-centric, there are always cross-border aspects. That’s why having good local counsel is crucial. We augment our team with international law firms to help us navigate those complexities.

‍Kison: Do you use one default law firm, or do you bounce between firms?

John Orbe: We have a primary firm that we like. When you work with a large law firm, they can leverage their network to find localized expertise. In many cases, they have offices in the countries where we're doing deals. If not, they have a network of trusted firms they can tap into.

(00:30:22) Cross-Border M&A Complexities

‍Kison: What are the biggest complexities with cross-border deals? It seems like employment laws outside the U.S. can be particularly challenging.

‍John Orbe: Yes, employment laws—especially in Europe with works councils—can be very complex. Two key challenges come up:

1. Legal requirements: As a U.S. attorney, I don’t always know local legal nuances. For example, in Germany, you have to go to a notary to sign deal documents. I know that now because I’ve done several German deals, but these requirements vary by country. That’s why we rely on local firms.
2. Cultural and logistical challenges: Time zones, language barriers, and cultural norms can make negotiations difficult. In some cases, it’s much more efficient to meet in person rather than negotiating over Zoom. Face-to-face meetings can establish trust and expedite negotiations that might otherwise take weeks.

Kison: Do you have a cross-border deal that was particularly challenging and had interesting lessons learned?

‍John Orbe: Yes, I had a deal in Europe where negotiations dragged out over two weeks due to time zone differences and Zoom-based communication. We were spending three to four hours a day negotiating, but because of time constraints, we had to keep pausing and reconvening. If we had just gone in person, we could have wrapped things up in two days instead of two weeks. The lesson learned: Sometimes, in-person meetings are the most efficient way to finalize deals.

(00:35:40) Technology and AI in M&A

‍Kison: Technology is playing a bigger role in M&A. How have you leveraged tools like DealRoom to streamline your processes?

‍John Orbe: DealRoom has been very efficient for us. The data room functionality is user-friendly, allowing us to share documents easily. It’s great for managing diligence and integration work.We're also exploring DealRoom’s AI tool for diligence. AI can reduce the time required for contract reviews, making it a cost-efficient solution. While human oversight is still necessary, AI can handle the initial review, flagging key issues for legal teams to focus on. Beyond that, using online platforms for integration ensures a single source of truth instead of relying on email chains.Kison: You’ve done over $35 billion in deals using DealRoom. Big banks often push for old-school data rooms that charge per page. How did you convince them otherwise?

‍John Orbe: Bankers are used to their legacy tools, but at the end of the day, they work for us. Our team is fully trained on DealRoom, and it has all the functionality we need. Since we’ve run billions of dollars in deals on DealRoom, it’s easy to push back and say, “This works—we’re using it.”

‍Kison: Technology and AI are shaping the legal approach in M&A. What’s your perspective?

‍John Orbe: AI is already making an impact, particularly in diligence. Traditionally, first-year associates review contracts, but it’s costly. AI can streamline that process, reducing costs and time.That said, AI isn’t perfect. It still requires human oversight. We recently had an instance where AI generated an interview outline that included things we explicitly wanted to omit. Someone still needs to review and validate the work. But overall, ignoring AI trends would be a mistake—it’s the future of M&A legal work.

John Orbe: At this stage, AI does not replace humans completely. What it does is it reduces the number of people required for certain tasks. Instead of five or six people reviewing documents, AI can expedite the process, allowing a team of one or two humans to handle the work. However, humans still need to interface with AI, instruct it properly, and verify the accuracy of its outputs. AI should be used as a tool to enhance efficiency, not as a complete replacement for human oversight.

Kison: What business outcomes would motivate you to adopt AI? Is it primarily about cutting costs, saving money on external legal fees, or speeding up processes?

John Orbe: Both. Cutting costs is always a key value proposition in business. But it’s also about saving time and allowing teams to focus on more complex, high-value tasks that require critical thinking—things AI can’t handle yet. AI reduces costs while freeing up time for more strategic work.

(00:40:15) Managing External Legal Counsel

Kison: What about external counsel raising fees every year?

John Orbe: That’s a challenge. Outside counsel fees keep rising, which is driving in-house teams to find ways to bring more work in-house and leverage technology. The goal is to use external counsel only for the most sophisticated, high-value aspects of a deal, while handling other components internally with the right tools. I’ve heard from in-house colleagues at other companies who are also looking at ways to decrease their reliance on external counsel due to rising fees.

Kison: Now I know who the early adopters will be for AI diligence products—especially ours. Moving from a law firm to an in-house role at Emerson, what strategic changes did you have to make in that transition?

John Orbe: One of the biggest shifts is the increased cross-functional exposure. You’re working with people outside of the legal department—finance, HR, operations—so you need to develop strong relationships with different teams. You also gain more business acumen and get involved in strategy. We aim to be business partners to our corporate development team rather than just legal advisors. Law firms tend to be more risk-averse, often saying "no." But in-house, we focus on finding solutions and getting to "yes."

Kison: How does being in-house influence your role beyond legal tasks?

John Orbe: Our corporate development team involves me in strategic discussions beyond just drafting agreements. I help shape negotiations, structure deals, and manage due diligence. It’s not just about executing transactions—it’s about forming strategy and helping the company achieve its goals. That’s what makes being in-house so engaging.

Kison: What does that initial conversation look like? Let’s say they call you up about a new deal—how does it unfold?

John Orbe: First, you have to earn their trust. Over time, they need to see that you provide sound, pragmatic advice. Once that’s established, these conversations often start informally. I’ll sit in their office, and we’ll brainstorm different angles of the deal, playing devil’s advocate. We discuss risks, opportunities, and negotiation strategies before an LOI is drafted.

Kison: So this is before an LOI is sent out? It’s more about shaping the approach and gathering key information?

John Orbe: Exactly. At that stage, it’s about determining the key issues to address and understanding how to structure the deal. Before committing to an LOI, we might strategize about what questions to ask and what terms to include.

Kison: Let’s say we’re looking to buy a small tech company in Europe. They have high valuation expectations, so we’ll likely need to structure an earnout. What are some key things we should consider?

John Orbe: My first piece of advice would be to avoid an earnout if possible. Earnouts often lead to post-closing disputes, so it’s best to find alternative ways to bridge valuation gaps. If an earnout is unavoidable, it needs to be drafted with extreme precision—clear definitions, well-delineated performance metrics, and dispute resolution mechanisms.

Kison: What other questions would you ask about the deal?

(00:50:30) People and Cultural Considerations in Deals

John Orbe: Since it's in Europe, I’d want to assess Works Council issues. Employee involvement in transactions varies by country, and compliance with local regulations is crucial. Since it’s a tech company, I’d also want to evaluate the IP portfolio—ensuring it’s well-protected and that all necessary invention assignments are in place.

I’d also look into their customer base. Do they have a diversified customer portfolio, or are they heavily reliant on one or two key customers? If a single customer accounts for a significant percentage of revenue, that’s a risk. I’d also check whether key customer contracts have change-of-control provisions—those can be deal-breakers if they require customer consent for an acquisition.

Kison: What if we find out half their revenue comes from one major customer? Would we need to check for change-of-control provisions before sending the LOI?

John Orbe: At a high level, yes. If a single customer represents a major revenue source, I’d want to know whether their contracts include a change-of-control clause and if they’d be willing to consent to the transaction. If that customer’s approval is critical, we might make the deal contingent on their consent and include that in the LOI.

Kison: What about the people side? Anything to dig into there?

John Orbe: Yes, aside from Works Council considerations, I’d want to identify key personnel. In a tech company, is there a critical engineer who drives product development? Are they about to retire or leave? These are crucial factors to evaluate early in the process.

John Orbe: Is there a COO-type person who really makes the company tick? If they're about to receive $10 million in the deal, are they going to sit on a beach somewhere, leaving the company to fall apart? Identifying key personnel early on is an important discussion point.

Also, when dealing with European transactions, understanding Works Council requirements is critical.

Kison: Just asking, "Are your employees part of the Works Council?" helps clarify that aspect. So, we’ve covered key employees, IP considerations, customer base saturation, and earnouts. How do I avoid the earnout? I always think of rollover equity—either paying in cash or rolling over equity. Instead of doing an earnout, do we just roll over more equity?

John Orbe: That’s one way to incentivize them. Instead of using a rigid earnout formula, giving them equity means if the company does well, they do well. It shifts the incentive structure. Negotiating a fair price upfront is key. Employment agreements might also be an alternative, offering restricted stock units (RSUs) or performance bonuses instead of earnouts.

If you do end up with an earnout, it’s crucial to define everything clearly to avoid disputes. A poorly defined earnout leads to post-closing conflicts. Ensuring clarity around metrics is essential.

Kison: So, avoid basing it on EBITDA?

(00:55:10) M&A Deal Execution and Closing Challenges

John Orbe: Correct. You need to ensure the parameters are clear and not subject to interpretation.

Kison: Looking at the future of M&A, how do you see legal teams evolving? With technology playing a bigger role, is collaboration increasing?

John Orbe: M&A is always going to be a critical part of companies like Emerson. The challenge will be integrating technology effectively. My wife once asked if I was worried about AI taking my job, but I told her no—someone still needs to instruct the AI. There will always be a need for in-house legal counsel to manage M&A processes, leverage technology, and ensure everything is done correctly.

(01:05:45) Craziest M&A Stories and Lessons Learned

Kison: That’s a great perspective. It gives legal teams more time to focus on human elements and relationship-building. What’s the craziest thing you’ve seen in M&A?

John Orbe: I’ve seen some wild things—lawyers sending highly unprofessional emails, people copying CEOs on complaints, and all-nighters leading up to a closing. In M&A, those final days can be intense, requiring long hours. I’ve taken work calls at family events and pulled all-nighters to close deals at 7 or 8 in the morning. It can be stressful, but I thrive on that challenge. Luckily, in-house, those situations are less frequent compared to law firm life.

Kison: How do you power through all-nighters? Energy drinks, coffee?

John Orbe: Caffeine helps—lots of coffee. But it’s worth it when you finally get the deal across the finish line. Afterward, sometimes you take a vacation. There used to be big closing dinners, which were fun. I’ve attended a few, but I hear they were even crazier back in the day. Those events were something to look forward to after sealing a big deal.

Kison: No long sabbaticals—just a closing dinner and back to work?

John Orbe: Pretty much!