The following article about Daniel Iannotti’s involvement in the sale of Hoover’s, Inc. to Dun & Bradstreet appeared in the May 2003 edition Texas Lawyer.

“The Urge To Merge”, Jeanne Graham, Texas Lawyer

© Texas Lawyer 05-05-2003

From the day he signed on last June as vice president, general counsel and secretary at Hoover's Inc., Daniel Iannotti was working on a deal. It culminated in March when shareholders of Hoover's -- an Austin-based business information provider -- approved the $117 million sale of the company to D&B Corp.

Throughout the ordeal of negotiating a merger agreement with D&B -- which included handling a shareholder suit, filed by a New York-based investment firm to prevent the merger, that was subsequently withdrawn -- and then the final sale, Iannotti knew he was working himself out of a job. Iannotti also oversaw the work of outside counsel Wilson Sonsini Goodrich & Rosati, a Palo Alto, Calif.-based law firm hired to handle Hoover's securities work and assist with merger transactions. D&B, headquartered in Short Hills, N.J., has its own legal staff, and, as expected, Iannotti will leave Hoover's at the end of May.

"Whenever a merger involves two public companies, that by itself is considered a very complex transaction," says Rob Suffoletta, a partner in the Austin office of Wilson Sonsini who worked with Hoover's. Added to the complexity of merging Hoover's and D&B was the shareholder lawsuit and then a competing bid that was later withdrawn. That made it a merger with three levels of complexity, Suffoletta says. Iannotti's background was helpful, he adds. "He has a wealth of experience on a variety of complex issues."

"It would have been nice to have a longer experience, but that's how it works out," Iannotti says. "You don't want the executives of the company to stand in the way of a transaction that makes sense for the shareholders."

"There's not a place for a GC in most subsidiaries the size of Hoover's, so it was clear from the beginning that if there were a transaction, there would not be a role for Iannotti beyond that transaction," says Jeffrey Tarr, Hoover's chief executive officer and chairman. "When it became clear it [the merger] was in the best interest of our shareholders, he was single-mindedly dedicated to getting the deal done, regardless of any personal costs."

Iannotti played a key role in negotiating the merger with D&B, a business information provider formerly known as Dun & Bradstreet, Tarr says. "I've seen him in very complex, high-stressed situations where he kept his calm, remained thoughtful, chose his words carefully and helped us navigate a potentially complex situation in a very effective fashion," Tarr says. The CEO and GC talked many times each day during the process. "We were always in each other's offices or on conference calls," Tarr says. "He was by my side through the entire process, and I wouldn't have wanted to do it without him."

Tarr will stay on as president of Hoover's and report to Larry Kutcher, a vice president in D&B's eBusiness Solutions Group.

The pace was demanding. "I don't think there was hardly a weekend or an evening that Dan was not in the office," Tarr says. "He was always available. There was a period of time after the transaction was announced, but before it closed, when we were having frequent board meetings. There were conference calls on Saturdays and Sundays. Dan was always available and always committed to getting it done."

At the same time, Iannotti was working to bring the small public company into compliance with the 2002 Sarbanes-Oxley Corporate Fraud and Accountability Act, enacted last summer. "While, at the same time, we were going through due diligence with D&B and trying to keep it quiet because we didn't know if we would get a deal or not," Iannotti says. "There were a lot of balls in the air. That was the toughest part. August, September, October, through November, it was nonstop nights and weekends with something always going on. The deal is on, the deal is off, it was very involved."

Iannotti says he has a simple technique -- a habit started in 1990 -- for handling the mental and physical stress of such complicated deals. "I work out every day, religiously," he says. "I run three miles, lift weights, and do sit ups and push ups. There is never a day I don't feel great after working out. It's usually enough to sustain me through a tough day, to me that's the secret."

After workouts these days, Iannotti is managing the transition of Hoover's legal affairs to D&B. He passes contracts on to D&B's contract staff for their review and agreement. Litigation already has been transferred to D&B's litigation staff, which was a simple task, says Iannotti, since there are very few suits pending against Hoover's. "We just don't have much litigation," he says.

Dave Slobodien, vice president-legal, litigation and compliance for D&B, says the transfer of those few litigation matters has been smooth. "He [Iannotti] is transitioning over to me the information he has, the background he has and the paperwork he has," Slobodien says. A seamless transition "requires good amounts of communication and willingness on the part of both parties, but that's what we've done," he adds.

Iannotti says he will make sure that Hoover's employees know who to contact at D&B for future assistance.

"When I leave, I will send around a document [internally] that says here's a list of [D&B] lawyers, here is what they do, their subject matter, their phone, e-mail and fax," he says. "I will put it up on the intranet so everyone in the company has access to it." He says employees are in a "bit of denial" at the moment. "They like walking the 50 feet to my office and handing something to me, and that's going to change when I'm gone."

Early Impressions

Iannotti grew up in Northern Michigan, in Bellaire, where his father owned a four-season resort with golf and tennis offered in the summers and skiing in the winter. In that business environment, Iannotti was exposed to the professionals his father employed or hired as consultants.

"I kind of looked around at those who had a lifestyle I sort of admired, and they were lawyers," he says. "They seemed to be well-respected and seemed to earn a decent income. I knew in undergraduate school that that was what I was going to go for."

He graduated from Michigan State University with a bachelor of arts degree in business, prelaw in the top 5 percent of his class. He earned a J.D. cum laude at Wayne State University Law School in Detroit and was editor of the Wayne Law Review. Since most corporations were not hiring lawyers right out of law school, Iannotti says he joined the firm of Dickinson Wright, with offices in Detroit and Lansing, Mich., in 1979. "It was a real good opportunity to go through their associates program, where I rotated through different legal departments," he says. But after three-and-a-half years, Iannotti knew it was time for him to move on.

"I thought it was just a game to bill more hours," he says. "There were not a lot of lawyers sensitive to the impact of those hours on clients. So I had an opportunity to join Michigan Bell, and I kind of never looked back."

Iannotti says it's easier to sit down and talk through a problem with clients as an in-house counsel because the clients are not worried about the meter running on billable hours.

So Iannotti, 47, has worked as an in-house counsel since 1983, with stints at Michigan Bell Telephone Co. in Detroit; Ameritech Services Inc. in Chicago; and SBC/Ameritech Directory Operations in Troy, Mich. He served as senior vice president, general counsel and secretary at Prodigy Communications Corp. in Austin from 2000 to 2002 and handled SBC's $469 million tender offer and merger with Prodigy, an Internet service provider.

When SBC acquired 46 percent of Prodigy in 1999, part of the deal included governance rights that allowed SBC to select an executive team that included placing Iannotti as senior vice president, general counsel and secretary at Prodigy.

Iannotti ended up in Texas when Prodigy shut down its White Plains, N.Y., office and moved its corporate headquarters to Austin to be in a high-tech community closer to its operations in San Antonio.

He and his wife, Adria, have two children -- their son, Adam, is a senior studying at Indiana University; their daughter, Jessica, is a sophomore at the University of Chicago. The couple recently sold their Austin home and plan to live in Grosse Pointe, Mich., near friends and family in the Detroit area. They'll be living in and refurbishing a house built in 1940 - taking down walls, redoing bathrooms and kitchen. "You get used to it," Iannotti says. "Dry wall soot everywhere, and messes and trade people coming in and out."

Iannotti says he plans to open his own firm in Grosse Pointe providing GC-type services on a contract or retainer basis to five to 15 clients. His goal is to find a group of small companies who cannot justify hiring a full-time GC. Iannotti says he envisions an ongoing relationship with these companies in which he dedicates a specific portion of his time each week or month to specific clients. "At least that's the plan," he says. He says he wants to understand his clients' businesses and become a counselor to the firms' executives.

He always has had an entrepreneurial streak, says longtime friend Jim Shimoura, a solo practitioner in Bloomfield Hills, Mich. The two former law school roommates talk by phone almost every month and get together about once a year.

Shimoura says Iannotti "enjoys more than just being a lawyer." As an example, he points to Iannotti's master's degree in business administration from Michigan State University in East Lansing, where he graduated from the advanced management program first in his class with a 4.0 grade point average. Shimoura says the program is a prestigious one in which students have to be nominated by their employers. Iannotti was nominated and sponsored by Ameritech while he worked there in the early '90s, Shimoura says.

"The program is designed to identify high-achieving young executives," Shimoura says. "Dan fit all those categories."

Greg Blair was Iannotti's assistant general counsel at Prodigy and says that he agrees with Iannotti's approach to the role of an in-house attorney. "You are a business person looking through a legal prism," says Blair, now assistant GC with Green Mountain Energy Co. in Austin. "Your role in-house is much more of a business partner and much less of a legal technician."

Iannotti says all GCs should have a strong business background because the job responsibilities include blending legal and business advice. He describes his father as a classic entrepreneur who started a number of businesses. "I was always kind of involved in business, thinking how they succeed, where they fail," he says. Working in-house "was just a natural thing for me to do." He also says the MBA gives him additional legitimacy with colleagues. "When you're talking to the vice president of marketing and you know some marketing, that gives you credibility," he says.

Iannotti's business acumen also helped Hoover's CEO Tarr strengthen his role as chairman of the company's board of directors.

"After every board meeting we would, as a staff, review what worked well, what we could have done better," Tarr says. "He was very direct, very insightful and was drawing on a lot of experience. I was a more effective chairman as a result."

Iannotti will leave a legacy of expertise at Hoover's. "I will miss having a business partner, not just the legal insight, but the business insight," Tarr says. "I will miss his input on every significant decision we make."