Zeidel & Associates Supports Merger of Two Recognized Hotel Management Companies

Situation

Zeidel & Associates represented a Chicago based hotel management company which was close to finalizing a merger with another hotel management company, in order to reposition itself for long term growth.  As part of this merger transaction, the owner of a key property managed by the client required changes to the existing hotel management agreement as a condition to granting its approval to the merger. The firm was asked to negotiate these changes in a manner acceptable to the client, the owner and the merger partner in an expedited manner so as to facilitate the upcoming merger closing.

Approach

Our client informed us that it wanted to use a light hand on pushing back on the owner’s requested HMA changes, and required our advice on addressing the comments they received. The firm reviewed the modifications proposed by the owner, along with the feedback from the client and its merger partner and provided suggested responses. At the same time, the merger partner expressed its desire to strengthen other terms of the agreement for the benefit of the management company going forward – most importantly, extending the HMA term and confirming that the owner would not have the right to exercise a certain termination option before the commencement of the initial renewal term. We were able to advise our client on language which addressed these requests in a way that was acceptable to all parties, and the hotel management agreement was completed.

Result

The revised hotel management agreement accommodated the owner’s and the merger partner’s concerns and allowed the client to move forward with the merger while preserving essential protections. The client was very satisfied with our work and expressed gratitude that its merger could close in a timely manner with an important asset protected.