From left, Martin Schrier and Jordan Chisolm, Cozen O'Connor. Courtesy photos

Miami attorney Martin Schrier came full circle in his work for financial software company PrecisionLender.

Schrier, who is chief strategy partner at Cozen O'Connor, helped the company form in 2009 and most recently guided its $510 million acquisition by another fintech firm. Schrier worked with Miami associate Jordan Chisolm on the cash deal, which closed Oct. 31.

Q2 Holdings Inc., an Austin, Texas-based publicly traded provider of digital solutions for financial institutions, acquired PrecisionLender, based in Charlotte, North Carolina.

PrecisionLender, formally known as named Lender Performance Group LLC, created software programs that help lenders price their loans and determine the best terms. Its software uses artificial intelligence that examines market data. PrecisionLender is led by CEO and co-founder Carl Ryden.

The acquisition means Q2 Holdings, which provides digital solutions for banks and other financial institutions, offers a new suite of services and expanded its reach to midsize and community banks.

"One of the reasons, as we were listening to the earnings call after the transaction happened, they were attracted to PrecisionLender is because PrecisionLender had a pretty tremendous presence among community banks and midsize banks," Chisolm said. "That was very much an area that Q2 did not really find itself having a strong presence in. The addition of PrecisionLender really expanded that portfolio."

No staff cuts or other significant changes are expected at PrecisionLender, Schrier said. Company management transferred to Q2.

PrecisionLender in May opted to go to auction to gauge the fintech industry interest but was going to accept only the right buyer, Schrier said.

"They were ready to sell if it was the right partner for the business and their employees and if obviously the dollars made sense," he said.

Q2 Holdings and a Fortune 50 company came out as the top bidders, but in the end Q2 nudged out the competitor. Attorneys declined to disclose the other company, saying only that Q2′s company culture played a role in it winning.

"Obviously, the price makes a difference. But from a cultural standpoint and for the employees, the Q2 acquisition, they were more attracted to that for the purposes of the general well-being of the employees and where it would take the company going forward," Schrier said.

"As part of the acquisition process, the executives from PrecisionLender spent a lot of time with the Q2 executives and managers and really saw how the company operated and the culture that Q2 brought," he said. "That was really attractive in a sense that it matched the PrecisionLender culture. That was not a deciding factor but was an important factor in the process."

The deal had its challenges, including Q2′s due diligence to guarantee PrecisionLender's software met functionality thresholds and intellectual property compliance. Also, PrecisionLender equity investors had to be part of the deal.

PrecisionLender previously went through five rounds of private equity financing with Cozen's help. Investors had their own deal terms and returns based on when they invested in PrecisionLender.

"The challenge and for me, and this was very much a learning experience, was trying to balance all of those to make sure each of the investors' interests are being considered and represented as well as making sure the company is also well-placed," Chisolm said.

Most of the $510 million in proceeds paid off the private equity investors, according to Schrier.

Transaction History

He helped PrecisionLender form 10 years ago after working on other ventures with the company founders. As the company grew, it sought guidance from other Cozen attorneys.

"It allowed us to grow with them and be partners with them so it was really an enjoyable process," Schrier said.

In the end, closing the deal required input from Cozen attorneys who worked on  PrecisionLender business over the years.

Tax group co-chairman Richard Silpe in Philadelphia and member James Forsyth in Pittsburgh worked on the deal.

The employee benefits and executive compensation attorneys who worked on the deal are Pittsburgh-based member Matthew Clyde and associate Anne Greene and Philadelphia-based members Robert Kaplan and Debra Steiner Friedman.

Intellectual property attorneys who worked on the deal are copyright practice co-chairman Samuel Lewis in Miami and member Ashley Kessler in New York. Antitrust attorneys who were involved were member Jonathan Grossman and associate Matthew Howell, both in Washington.

DLA Piper partners John Gilluly III and Jenifer Smith and associate Chen Zhang, all in Texas, represented Q2.

The deal took about 45 days to close once negotiations began, Schrier said.