SRS Appointed Shareholder Representative in More than $4 Billion in Global Merger Transactions During Its First Year

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Filling a Need in the M&A Industry, First and Only Professional Shareholder Rep Firm Now Engaged by More Than 50 Institutional Investors

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SRS takes a process that has often been problematic and makes it simple

Since opening its doors a year ago, Shareholder Representative Services LLC (SRS) has experienced rapid growth and is now managing $500 million in escrow funds across more than 20 deals. With over $4 billion in transactions, SRS identified a previously unsatisfied market need and has changed the way many institutional stockholders think about closings of their merger and acquisition exits. SRS is the first and only company that specializes in representing shareholders following the closings of private M&A transactions in connection with matters such as escrow disputes, purchase prices adjustments and other similar issues.

SRS founders Paul Koenig and Mark Vogel established SRS at the urging of several of the country's leading venture capital firms who no longer wanted to assume the risk or burden of representing themselves and other shareholders following the sale of their portfolio companies. Professional and independent shareholder representation is a fundamental change in how venture capital firms manage their M&A exits and this new trend has been widely accepted by the financial and legal community.

"Before SRS, selling shareholders really had no other options but to take on the role of shareholder rep themselves, which always involves unknown risk and tedious administrative tasks that are guaranteed to take away from their time managing their portfolio companies or looking for new opportunities," said Koenig. "SRS fixes this. When they hire us, they have comfort that the process is being professionally managed and can focus their efforts on maximizing the value of the rest of their portfolio."

"With the increasing complexity of issues and diversity of interest among stockholders, our board preferred to hire a professional and independent resource to represent the interests of all stockholders during the escrow period," said Cynthia Garabedian McAdam, former vice president and general counsel at Postini, Inc., who hired SRS in conjunction with Postini's acquisition by Google. "I have now worked with SRS both before and after the closing, and it truly does make a difference to have a professional shareholder rep looking out for the stockholders' interests."

What Does a Shareholder Rep Do?
As shareholder representative, SRS manages claims by buyers for damages related to breaches of representations or warranties, communicates with escrow agents and other parties to the transaction, resolves any purchase price or working capital adjustments, and handles any administrative tasks that may arise following closing. "Hiring SRS is not simply outsourcing a job shareholders would like to avoid. It is about having the right team in place that has extensive knowledge to handle myriad complex legal, financial, accounting and business issues," said Vogel. "SRS manages the entire post-closing period with professional processes and reporting not previously available when one of the stockholders reluctantly had to take the job." Vogel further explained that the SRS team is comprised of highly qualified lawyers, bankers, accountants and entrepreneurs whose sole focus is shareholder representation.

The Benefits of Professional Shareholder Representation
"The benefits of hiring a professional shareholder representative are numerous, and we have added most of the top venture capital firms to our client list in recent months as they see the advantage of having a dedicated and experienced shareholder rep to maximize the value of their investment," said Vogel. "With all M&A deals, professionals are hired for each phase of the transaction, and shareholder representation is now considered an increasingly important part of the equation according to our colleagues in the legal community who advise their clients to avoid the risk associated with being the shareholder rep. There is no longer any good reason why a shareholder needs to, or should, do the job themselves."

The benefits of hiring a professional shareholder representative are:

  • Professional post-closing management allowing all shareholders to avoid the administrative burdens and risks of being the shareholder representative
  • Independent advocate for all shareholder interests
  • A dedicated team of lawyers, accountants, and other experts to handle claims, disputes and litigation
  • Shareholder retention of control over decision making process on major issues
  • Sophisticated claims management and escrow monitoring systems
  • Managed shareholder communications with a dedicated email address, toll-free number and secure online access
  • SRS's innovative Escrow CentralTM service provides an extremely useful way for shareholders to track and monitor their escrow balances across multiple transactions
  • A dedicated person to handle all aspects of the post-closing process across all deals

"SRS takes a process that has often been problematic and makes it simple," said Scott Ring, general counsel, Bessemer Venture Partners. "In particular, their Escrow Central service is an especially valuable tool that allows us to easily stay on top of escrows on multiple deals since SRS consolidates reporting across all of our transactions."

Shift in M&A Market Practice
The SRS value proposition is catching on, especially in the venture capital community. More and more VCs are seeing SRS as a logical solution to the shareholder rep dilemma. More than 50 top-tier institutional investment firms across the U.S. have chosen to hire SRS for the role of shareholder representative.

"The VC community is excited about having SRS available, and many of my colleagues are agreeing that they'll never serve as the shareholder rep themselves again," said Jason Mendelson, Managing Director, Foundry Group. "Their service just makes sense."

About SRS Management
SRS is led my two industry professionals, Paul Koenig and Mark Vogel, who combine their expertise in the legal and financial fields with their experience working with venture capital/institutional investors as well as start-up companies:

Paul Koenig - Managing Director - Denver: Prior to forming SRS, Paul practiced law at some of the nation's most prestigious law firms specializing in the representation of companies and financial institutions in a wide variety of corporate and securities law matters, including mergers and acquisitions, debt and equity financings, company formations, general corporate representation and securities issuances and compliance.

Mark Vogel - Managing Director - San Francisco: For the last thirty years, Mark has been in senior management in financial services as well as an entrepreneur. Most recently, Mark was a founder of two venture-backed start-ups in the area of Internet and network-based data management and embedded/intelligent device software technology - the software that drives machines.

For more information about Shareholder Representative Services, visit our website at http://www.shareholderrep.com.

About Shareholder Representative Services
Headquartered in San Francisco and with offices in Silicon Valley and Denver, SRS provides professional shareholder representation services following the closing of an M&A transaction. As shareholder representative, SRS manages the entire post-closing process including the management of escrows, earn-out negotiations, the handling of claims, disputes and litigation, communications with the acquirer, and, ultimately, distribution of escrow funds. By engaging SRS, investors are able to focus on their core competencies - identifying the next deal and managing the rest of their portfolio - rather than being distracted by the administrative burdens and legal and financial risks that may inure to the shareholder representative. The professionals at SRS have the expertise to simplify the post-closing process for the investors and to maximize return of sale proceeds to shareholders. More information on the company can be found at http://www.shareholderrep.com.

Contact:
Carla Zuber
Director of Marketing
Shareholder Representative Services
Phone: 415-373-4022
Email: czuber@shareholderrep.com

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