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Cadence Design Systems Inc. closed its deal to buy Verplex Systems Inc. on Aug. 19 — but there’s a catch. The San Jose-based maker of semiconductor systems structured the deal to defer some of the $130 million purchase price until later to see if Verplex, which makes semiconductor-testing software, performs according to projections. Such deferred-payment plans, called earn-outs, are easy to do when the target company, in this case Verplex, is privately held and the shareholders are individuals, said Gregory Conklin, the Gibson, Dunn & Crutcher partner who led the deal team for Cadence. How much Cadence paid up front for the Milpitas-based Verplex and how much will be deferred was not disclosed. An earn-out is a compromise to help bridge the gap between a seller’s price and what Cadence is willing to pay, Conklin said. “It tends to reflect a difference in value when sellers have a certain view based on what may happen in the future,” he said. Conklin’s team included partners William Claster, Paul Issler and David Kennedy and associate Stewart McDowell. Also lending an assist were associates Betsy Austin, Dora Arash, Peter Christou, Michael Collins, Leonor Dicdican, Kendra Kresse, Matthew Samuels and Denise Powers. For Michael Dorf, a Wilson Sonsini Goodrich & Rosati partner, and his team on the Verplex side of the deal table, the structure prompted them to seek additional assurances that his client’s team would have the resources they need to meet the performance goals. “There’s always a tension over who controls pricing and budgets,” Dorf said. “The goal is to reach a middle ground.” The deal provides for Cadence to pay Verplex stockholders more money if certain milestones, related to product development and revenue targets, are met over the next three years, Dorf said. Dorf’s deal team included partner Chris Fennell and associates Wendy Boufford and Robert Devens Jr. Partner David Gerson pitched in on tax issues and associate Jason Borrevik took on employee benefits issues. Associate Ricardo Velez also pitched in on corporate issues. Bell Microproducts Gray Cary Ware & Freidenrich scored its fourth public offering this summer by representing the underwriter in an Aug. 22 stock offering. Gray Cary client Needham & Co. Inc. was the lead underwriter for the $32.5 million stock sale for Bell Microproducts Inc. Partners Scott Stanton and Laura Sand led the team for Needham. Associate Audrey Wong had a hand in the deal as well. Based in San Jose, Bell makes computers and equipment that are sold under its own brand and many other names. The company was represented by the Minneapolis-based Fredrikson & Byron. James Illson, Bell’s chief financial officer, said the company tapped the Midwestern firm for general corporate work after it pitched in on several acquisitions.

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