WASHINGTON, D.C.—Womble Bond Dickinson’s Impact Business Group is a finalist for the inaugural Grunin Prize, to be presented June 5 by the Grunin Center for Law and Social Entrepreneurship at the NYU School of Law.
The Grunin Prize recognizes “the variety and impact of lawyers’ participation in the ways in which business, whether for-profit or not-for-profit, is increasingly advancing the goals of sustainability and human development.”
Womble Bond Dickinson was among the first law firms in the country to form a team specifically focused on the Impact sector, serving companies that seek to “Do good while doing well.” The firm has resources from a wide range of practice areas to help companies operating in the Impact space.
For the Grunin Prize nomination, the firm was nominated for the work of Pam Rothenberg, the leader of the firm’s Impact Business Group and partner in WBD’s Washington DC office, veteran corporate transactions attorney Alex Park, veteran tax attorney Howard Solodky, and Director of Impact Strategies Mark Newberg. Rothenberg, Park, Solodky and Newberg worked with BOMA Investments Co-Founder Ron Boehm, ADAP Capital Founder Andy Lower, and Relevée Co-Founder John Berger to create a new investment product called “Performance Aligned Stock.” This innovation has helped Relevée, a socially responsible jewelry business in India, and stands to aid many more Impact businesses.
The goal of Performance Aligned Stock was to create an equity structure that acted like debt, allowing investors to invest without forcing entrepreneurs into an untimely exit, thereby preserving their company’s impact mission. In addition, the Performance Aligned Stock team had to find a way to make repayments both predictable and manageable in schedule. Such a schedule would enable regular payments to the investors without imperiling the ongoing viability of the enterprise.
Imbedded within the product’s final terms and structure were four key considerations:
1. It had to align incentives between Impact investors and Impact entrepreneurs (with the goal of enabling Impact entrepreneurs to retain long-term control of their enterprises).
2. It had to provide predictability of return on investment (for the investors) and predictability of payments in return of the investment (avoiding some of the “demand payment” problems encountered in other structures), all in a manner tied to the company’s revenue projections.
3. It had to be replicable and scalable.
4. It had to avoid creating any unanticipated tax issues.
In late 2016, more than year after the Womble Bond Dickinson team began working with the client, the first Performance Aligned Stock transaction closed. The raise enabled the scaling of a women-run artisanal jewelry manufacturer in India. The company uses ethically sourced gems and precious metals and employs women as artisans and goldsmiths, paying them a transformative middle-class wage. In addition, proceeds from the sale of this jewelry benefit the survivors of human trafficking, child marriage, child labor and other human rights abuses.
By working cooperatively in conceiving, structuring, and documenting the first use of Performance Aligned Stock, Womble’s team was able to turn an idea into an executed reality. That, in turn, has created a replicable framework that future investors and entrepreneurs can use to align their interests in pursuit of Impact.
Pam Rothenberg counsels companies in the growing Impact Economy, ranging from large legacy businesses to newly formed entrepreneurial ventures, to facilitate their participation in Impact. She also has extensive experience in a wide range of commercial real estate transactions, having worked with clients to acquire, sell, develop, lease and finance major commercial, multi-family, and mixed-use projects. Pam is a change agent and founded Womble’s Impact Business Group, leading a team of more than 40 firm professionals who provide a complement of strategic and legal services at the cutting edge of the rapidly growing Impact Economy.
Alex Park has advised public and private companies on corporate, securities, M&A, capital markets, spin-off, reorganization and partnership transactions for more than 20 years, with particular focus on advising commercial real estate companies, REITs, hospitality/lodging companies, governmental contracting and IT companies. He has served as counsel to issuers and underwriters for dozens of public company REITs in more than 80 public and private-capital raising transactions.
Howard Solodky has a base of more than 40 years of US federal income tax knowledge, and he has become the firm’s lead tax attorney supporting its private equity and hedge fund practice that entails representation of both fund sponsors and institutional investors. He regularly provides clients with tax advice on properly structuring and documenting mergers and acquisitions, joint ventures, equity investments, dividend recapitalizations and the like. Because Washington, DC is a hub for non-profit organizations, Howard also regularly provides advice to large tax-exempt organizations regarding unrelated business income tax issues and preservation of tax-exempt status.
Mark Newberg is Director of Impact Strategies for Womble Bond Dickinson. He leads the firm’s Impact and ESG-focused strategic consulting work, building on his decade of experience at the leading edge of the Impact Economy. Over that decade, Mark has led Impact/ESG-related initiatives ranging from for-profit business strategy development, to Federal policy creation, to high-growth entrepreneurship, to disaster recovery, and beyond.