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On the morning of April 4, Stanley Stroup got an urgent call telling him he’d be responsible for a multibillion-dollar bank merger. As executive vice president and general counsel of San Francisco’s Wells Fargo & Company, Stroup was being asked to smooth the way for the marriage of his company to Salt Lake City’s First Security Corporation. It had been a long courtship; Wells Fargo had tried to woo First Security for a decade. Meanwhile, First Security’s marriage to Zions Bancorporation collapsed at the last minute after Zions shareholders balked. When First Security’s CEO called with a merger proposal, Wells Fargo didn’t act like a miffed, jilted suitor. It said “yes.” So when Wells Fargo’s executive vice president of corporate development, John Ganoe, called Stroup at the office to tell him to get a move on the legal work, the message was clear: Get the deal done quietly, and get it done fast. Stroup immediately telephoned a senior counsel for mergers and acquisitions, Margaret Halfman, in Minneapolis, home base to about half of Wells Fargo’s legal department. She helped organize teams of in-house lawyers and business staffers and sent them to conduct due diligence in all the places First Security did business — Salt Lake, San Francisco, and cities throughout Idaho, Nevada, and New Mexico. Most of this due diligence — combing through boxes upon boxes of First Security’s records on everything from litigation to trusts to taxes — was undertaken in empty warehouses furnished with just folding tables and chairs. From the outside, the buildings looked abandoned. Only those who needed to know about the potential merger were being informed. If word got out to the public, the market might react, speculators could drive up prices, and shareholders of both companies might overreact to all the hype. Halfman logged onto the Internet and began examining the Zions agreement. “I wanted to understand how we were going to step into this transaction,” she says. She started drafting her proposed agreement that afternoon; it grew to 40 pages. And by next morning she e-mailed it to Stroup. Halfman knew they weren’t going to be able to keep this possible merger quiet for long. The warehoused lawyers e-mailed their due diligence reports to Stroup and Halfman while an internal review group of company business employees read all parts of the agreement. “We couldn’t do this [as fast] with faxes and stuff in the old days,” says Halfman. Everyone was spread out: She stayed in Minneapolis and Stroup in San Francisco, while lawyers for First Security were in New York. The agreement was signed in Salt Lake City. A mere six days after Stroup first got the call, a $2.9 billion deal was completed. It had been handled on Wells Fargo’s side solely by in-house counsel. First Security relied on outside counsel: M & A powerhouse Wachtell, Lipton, Rosen & Katz. Most companies do call in heavyweight outside counsel to handle mergers of this magnitude. But Wells Fargo’s legal team are veteran dealmakers. In January, Wells Fargo agreed to merge with National Bancorp of Alaska, Inc. In February it was First Commerce Bancshares, Inc. In March it was Michigan Financial Corporation. All were handled in-house. For First Security, Stroup felt comfortable going it alone. Says Ganoe: “All we have to do is just tell [our] people where to show up.” They come with a bag of familiar techniques. The M & A in-house team also has developed “templates of definitive agreements,” says Ganoe. “Stan [Stroup] and I did the first deal together in 1986, wrote the first definitive [agreement] word by word,” he says. “We dotted the i’s and crossed the t’s” and came up with an agreement that has all the necessary jargon. “It has the holes to fill in for what you need to get.” Exactly, says Stroup: “It’s not like we’re inventing something from scratch.” Of course, if a deal is unusual and requires some specialized knowledge, Stroup says, he can always call outside counsel. But he prefers to keep the M & A work in-house. “Because of the intensity of it, the focus of it, the time of it, it’s a good team-building event,” says Stroup. Besides, “it’s exhilarating.”

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