Earnouts: One Solution to a Valuation Impasse - Plante Moran

Earnouts: One Solution to a Valuation Impasse

In today’s M&A environment, earnouts are playing an ever important role in bridging the
valuation gap between buyer and seller. Valuation multiples are generally increasing as the
global economy begins to improve and companies again are beginning to invest in organic and
acquisition growth. This creates an environment with heightened value expectations for the
seller while buyers demand certain return requirements without over-leveraging a deal. Thus,
despite all their “thorns,” earnouts are an important solution to bridging valuation gaps in today’s
M&A environment.

Two CEOs get together to talk about ABC Co. acquiring XYZ Co. They’ve met several times
and their respective boards of directors have approved of their meetings and discussions. ABC’s
CEO offers $20 per share for XYZ, which he says is a premium price and a hefty multiple of
XYZ’s historical EBITDA. XYZ’s CEO says that ABC’s offer does not take into account the
recent investments in R&D that XYZ has made that are about to pay off through significant
revenue and EBITDA increases over the next two years. XYZ’s board of directors will not
accept a price less than $35 per share, which they consider to be a conservative multiple of the
projected EBITDA. How can they close this $15 per share gap?

Such impasses are not uncommon. What can be done to prevent deals like this from falling
apart? Deadlocks concerning the value of the target often turn on financial forecasts. One
solution may be an earnout. Earnouts may offer both parties a way to mitigate the risks of
mispricing while still sharing in the rewards of the transaction if the deal turns out to be as
successful as the seller predicted.

Overview

An earnout is a variable pricing mechanism that makes a portion of the final purchase price
contingent upon the post-sale performance of the acquired business. Earnouts are most often
used when the buyer and seller cannot agree on value. They are particularly useful in volatile
industries or when the buyer’s projections for the target are more conservative than those of the
seller. In the current M&A environment, earnouts have become more prevalent, as they were
used in nearly 30% of transactions closed in 2008.1

In an earnout arrangement, if the acquired business reaches certain pre-set benchmarks or
milestones over the specified earnout period, the seller is paid the contingent consideration by
the buyer. The milestones are typically financial, but may take the form of non-financial targets,
as well. This performance-contingent portion of the aggregate purchase price may range, on the
low end, from 20% to 30% of the base consideration to, on the high end, two to three times the
base consideration. Most earnout periods conclude within two to three years after the closing.
The length of the earnout period is determined by the nature of the milestones.

An earnout can be a valuable tool in transactions in which the buyer and seller have different
views on the value of the target and otherwise are unable to find common ground. Such

1 Source: American Bar Association 2009 Private Target M&A Deal Points Study

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

disagreements are common when the target does not have a meaningful operational history, has a
promising but unproven product or technology, has experienced a recent drop in earnings or
expects a significant increase in future earnings. In such situations, an earnout may be the key to
consummating the deal. The earnout arrangement promises the seller a better final sale price if its
projections are accurate while protecting the buyer from overpaying if the seller’s projections are
inaccurate.

While earnouts can mitigate risks for both the buyer and the seller, they have great potential for
engendering later disputes about the contingent payment. Disputes often arise when the seller
suspects that the buyer is using different accounting techniques or is artificially depressing
revenue or earnings during the earnout period to diminish the payment, or is not funding the
business sufficiently or operating the business in a manner to allow it to reach the earnout
milestones. To prevent these potential disputes, buyer and seller should draft a clear, concise and
complete earnout formula before consummating a transaction. In addition, the parties should
agree in advance on how these types of problems should be treated if they arise (indemnification,
dispute resolutions, accounting mechanisms, etc.)

Advantages of Using an Earnout

An earnout obviously offers a seller the potential to obtain a higher final sale price than it might
have received in a fixed-price sale. It also allows for exit today without forfeiting the
opportunity to capture value from the future growth of the company. Are there advantages to the
buyer, as well?

In addition to providing protection from overpayment, earnouts offer a buyer several other
advantages that flow from the deferral feature of the arrangement. An earnout means lower up-
front capital is required. This translates into an acquisition that is effected today but financed
with tomorrow’s dollars. It also means that the value added to the target during the earnout
period may allow the buyer to pay part of the final purchase price out of the target’s own
earnings and cash flow.

Furthermore, if the target’s management or shareholders continue to manage the business post-
closing, an earnout arrangement can be used by the buyer to motivate the management team.

Lastly, buyers can use earnouts as a source from which they can offset indemnification claims
against the seller. Based on transactions that closed in 2008 and included earnouts, 58%
contained express offset rights. Only 10% prohibited offsets. The remaining 32% were equally
split between those that were silent on the issue and those for which offset rights couldn’t be
determined.2

The Risks of Using Earnouts

2 Source: American Bar Association 2009 Private Target M&A Deal Points Study

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

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Despite the potential benefits that earnouts offer, there are certain challenges presented by
earnouts that make many wary of including them as part of a deal’s consideration. Furthermore,
earnout arrangements can be complex and complicated, particularly those based on achieving
financial milestones.

Often, earnouts are based on the target achieving agreed upon EBITDA (or adjusted EBITDA)
thresholds post-closing. This deceptively simple concept can result in a nightmare of accounting
and financial statement analysis and a need to incorporate lengthly and complex formulas in the
acquisition agreement to describe how the milestones will be measured. Comparing the previous
year’s EBITDA (or an average of historical EBITDA) to the EBITDA generated by the target
during the two or three years after closing is often a difficult task. Numerous potential non-
recurring and/or extraordinary costs must be considered and adjusted out of the calculations,
including:

• Allocations of corporate overheads pre- and post-closing
• Perquisites for senior management, founders and/or family members pre-closing
• Interest and other costs of any debt used to finance the acquisition
• Management fees paid to a private equity sponsor pre- or post-closing (in the case of a

financial buyer)

This is only a partial list of the items that may need to be evaluated from an accounting and
financial reporting perspective.

In addition to the accounting considerations, there are business realities that the buyer should
weigh carefully. If the buyer agrees to operate the target’s business after the closing in a manner
consistent with past practice, the buyer could be impeded in its ability to find and utilize
synergies, reorganize and integrate the target into the buyer’s other operations, and/or change the
target’s operations to implement new, perhaps longer-term, efficiencies.

Negotiating and drafting effective earnout provisions also can be a difficult task due to the
number of issues that must be resolved by the parties on topics such as how the business will be
operated during the earnout period and how to measure its performance. These negotiations will
consume the time and resources of both the buyer and the seller – at a time when the parties
would prefer to focus their attention on closing the transaction and planning for other integration
and post-closing activities.

Post-closing risks exist, as well. Earnout arrangements demand considerable monitoring and
measuring of the target’s performance, extracting both time and resources from the buyer, seller
and managers. The time spent on these tasks may distract the management from effectively
and/or optimally running the business. Buyers also face the risk that the payout formula will
overcompensate the sellers if there is a change in the buyer’s post-closing business plan or if it
makes another acquisition – changes that otherwise may have little to do with the target’s
original value.

Another disadvantage is that, due to the earnout’s very nature, the relationship between the buyer
and seller may become adverse during the earnout period, as earnouts have great potential for
engendering subsequent disputes. For example, the seller might believe that the buyer is not

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

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running the business properly or suspect that the buyer is using different accounting techniques
or artificially depressing earnings in an effort to reduce the payout. On the other side, if the
target’s management or shareholders continue to manage the business after closing, the buyer
may fear that the target is more focused on remaining separate in order to support the earnout
than it is focused on becoming efficiently integrated with the buyer’s overall operations.
Disputes also may arise if the buyer suspects that the target is operating the business so as to
inflate the earnout payments. Such disputes can result in additional expenses, and perhaps even
necessitate a second negotiation of the earnout.

Crafting a Successful Earnout

If the buyer and seller decide to use an earnout to resolve their valuation impasse despite the
attendant risks, they should consider all facets of the earnout and the post-closing operations of
the business and then plan for the unexpected. A buyer and seller that have different views on the
value of the target also are likely to have very different views on how to structure the earnout and
how to measure relevant performance. There is no standard earnout arrangement that can be
pulled from the shelf and dusted off. The relevant issues particular to the target, its operations
and/or accounting must be understood in order to craft a successful earnout. In doing so, there
are six main areas to which careful consideration should be given:

1. Setting the Milestones

Earnout milestones may be financial or non-financial in nature, or a combination of the two. For
example, if XYZ Co. is an “early stage” pharmaceutical company and ABC Co.’s $20/share
offer represents a “closing payment” of $100,000,000 (a portion subject to escrow), the
$15/share valuation gap could be addressed using the following milestones and milestone
payments:

Milestone Milestone Payment

Enrollment of first patient in a Phase III $37,500,000
clinical trial

FDA approval of a New Drug Application for $18,750,000
the first indication for [the drug]

European regulatory approval of a marketing $8,750,000
authorization application for the first indication
for [the drug]

Revenues for any consecutive 12-month period $10,000,000
reach $150,000,000 for the first time

As you can see, if each of the milestones was achieved, the aggregate milestone payments would
increase seller proceeds by 75%. Interestingly, deadlines were not set for any of these
milestones.

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

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Non-financial milestones, such as passing the second phase of clinical trials, obtaining certain
regulatory approvals, completing new product launches or expanding client bases, are often
selected when the target’s value is tied to a promising but still unproven technology or other
development. In order to minimize potential valuation problems and avoid having to build the
target’s post-closing financial statements prior to the closing, non-financial milestones also can
be used for the purpose of providing operational focus to the management.

Common financial milestones include the target’s net revenues, net income, EBIT, EBITDA,
earnings per share or net equity thresholds. Revenue-based milestones are often an attractive
choice for sellers. They view revenue thresholds as more certain than other measurements
because operating expenses and the buyer’s post-closing accounting practices have little chance
of altering the earnout calculus. Buyers, however, are often reluctant to use revenue-based
milestones if the seller will continue to operate the business, since revenue tests offer little
incentive for the seller-operator to control costs and maximize profits.

EBIT- or EBITDA-based milestones are often used as financial milestones because they do not
raise the same concerns as measures of revenue or net income. EBIT and EBITDA, which reflect
the cost of goods and services, selling expenses and general and administrative expenses, are
considered more difficult to manipulate than other measurements. They also exclude interest,
taxes, depreciation and amortization, which can vary significantly pre- and post-closing. The
parties should consider excluding from the calculation of financial milestones any transaction
costs associated with the acquisition. Based on transactions that closed in 2008 and included
earnouts, 29% of earnouts tracked revenue, 32% tracked earnings or EBITDA and the remaining
39% tracked other metrics.3

Regardless whether financial or non-financial milestones are preferred, the parties should
identify and address any post-closing contingencies that could potentially alter the business’s
ability to reach the earnout milestones. The goal should be to select benchmarks that are clear,
capable of being audited and compatible with the nature of the target’s ongoing operations post-
closing.

2. Measuring Performance

In addition to establishing the milestones, the process and framework for determining whether
the milestones have been reached must also be agreed upon. For non-financial milestones, this
may be a fairly simple “yes or no” test. For financial milestones, it tends to be more involved.
Typically, the buyer and its accountants will make the initial determination of whether the
milestones have been reached. The sellers then will review the calculations and, if appropriate,
challenge them. It may be wise in some circumstances for the agreement to require that the
results be audited. Additionally, the sellers should always insist that the buyer maintain separate
books and records for the target throughout the earnout period and make them available for
review upon reasonable notice.

3 Source: American Bar Association 2009 Private Target M&A Deal Points Study

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

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Where the milestones are financial, the earnout agreement should specify the accounting
principles and specific line-items that will be used (or excluded) to calculate whether the
milestones have been reached. A mere reference to GAAP is not adequate as GAAP may not
specifically address the accounting policies of an earnout. The agreement should stipulate that
post-closing accounting with regard to revenues and expenses will be consistent with pre-closing
practice, and if not, where and how it will differ. For example, if EBIT or EBITDA is the
measure of performance, sellers should identify administrative or general overhead expenses that
the buyer will allocate to the target after closing (or that were allocated to the target prior to
closing, if the target was part of a group of companies) and determine how those expenses might
impact the earnout calculation. If calculating the payout using a net income test, the agreement
should address whether amortized goodwill connected with the transaction will be added back
and whether adjustments will be made for increased interest expenses or higher depreciation due
to a write-up in asset value. Other common accounting questions to be resolved when crafting
the earnout include whether to adjust for extraordinary gains or losses, acquisition indebtedness
and management fees allocated to the target post-closing. The application of FASB Statement
No. 141R Business Combinations (“FAS 141R”) also needs to be given careful consideration.
For example, FAS 141R requires pre-acquisition contingencies to be recognized at fair values
(rather than “reasonably estimable amounts”). These accounting and financial reporting items are
a common source of later earnout problems. Achieving consistency in accounting can be
especially difficult if the target will be integrated into the buyer’s business or if the target will be
operated differently in the hands of the buyer.

FAS 141R also requires a buyer to recognize the fair value of earnouts in the initial accounting
for the acquisition as part of the consideration transferred for the target on the acquisition date.
Under prior accounting practice, contingent consideration was typically recognized upon
resolution of the contingency and payment of the consideration.

3. Operation of the Business Post-Closing

How the target’s business will be operated post-closing is an issue that can have significant
consequences on the measurement of its performance, its integration into the buyer’s business
and the risk of later disputes. Typically, even if the buyer retains the target’s management after
closing, the buyer will want to be able to control and direct the target’s business on its own. The
sellers may attempt to reserve, through contractual covenants, some authority with regard to
major decisions made during the earnout period, such as expanding or re-branding the business,
taking on additional debt and the hiring or firing of key personnel. Sellers also may wish to
reserve one or more seats on the board of directors, or at least rights to obtain financial and other
relevant information, and to include operational specifics in the acquisition agreement to protect
themselves and avoid uncertainty. For instance, they may require that the buyer operate the
target in the ordinary course of business consistent with pre-closing practice and/or require that
the buyer adequately fund the target during the earnout period so that it can capitalize on

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

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opportunities presented to it. 29% of earnouts in transactions closed in 2008 included a covenant
to run the business in accordance with past practices.4

The buyer generally will want to resist any restrictions on its ability to run the business after
closing. For example, the buyer may want to move operations such as purchasing, component
manufacturing, or distribution to the target’s new “sibling companies” after the closing, in an
effort to exploit potential synergies. Having to operate the target consistent with past practices
can impede the buyer’s ability to fully integrate the acquired business into the rest of its
operations. Difficulties can also arise if the buyer acquires other similar businesses during the
earnout period. Keeping the target segregated can preclude the buyer from achieving the
economies of scale and other synergies it anticipated by using the target as a “platform” for
future acquisitions or by combining the target with similar businesses in the buyer’s existing
portfolio. As a result, the buyer may seek acknowledgement by the sellers that the buyer has the
right to operate the target as it deems appropriate with no obligation to achieve or maximize the
earnout. Only 10% of earnouts in transactions closed in 2008 included a covenant to run the
business to maximize the earnout.5

When negotiating the earnout arrangement, the parties should also decide whether a sale of all or
a portion of the target to a third party will be permitted during the earnout period. If permitted,
the effect that a sale would have on the earnout should be addressed. For example, will the next
buyer assume all or a portion of the earnout obligation, or will all or a portion of the potential
earnout be paid out upon sale? What happens if a third party acquires the buyer during the
earnout period? Are the earnout payments triggered, or does the new owner assume the
obligations? Based on transactions that closed in 2008 and included an earnout, 33% of purchase
agreements included a clause that accelerates the earnout upon a change in control.6

4. Linking Earnout Payments with Future Employment

In some circumstances, a party may wish to link the contingent consideration with the continued
employment of the target’s management. Creating such a condition can create potential
accounting and tax issues. Where the earnout is based on future earnings and the target’s
management enters into employment contracts with the new entity, the earnout may be
characterized as compensation expense, rather than as an adjustment to the purchase price. The
characterization of the contingent consideration as compensation rather than purchase price will
affect when the buyer and the seller record the earnout payment. If the earnout is compensatory,
there will be an immediate hit to the buyer’s profit and loss statement because the payment
would not be treated as purchase consideration that may otherwise be amortized.

4 Source: American Bar Association 2009 Private Target M&A Deal Points Study
5 Source: American Bar Association 2009 Private Target M&A Deal Points Study
6 Source: American Bar Association 2009 Private Target M&A Deal Points Study

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

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According to EITF-95 issued by the Financial Accounting Standards Board’s Emerging Issues
Task Force, there are four primary factors to be considered when determining the character of the
contingent consideration:

• The reasons for the contingent payment arrangement
• The formula for determining the contingent consideration
• Any linkage of payment of the contingent consideration with continued employment
• The composition of the selling shareholder group

Whether the contingent consideration constitutes purchase price or compensation ultimately
depends on the particular facts and circumstances. EITF-95 notes that if an earnout is
automatically forfeited if employment terminates, it is likely to be characterized as
compensation. The absence of such a linkage, however, does not necessarily imply that the
earnout represents purchase price.

Other indicators include whether selling shareholders who become employees receive higher
contingent payments as compared to those shareholders who do not become employees of the
target and/or the buyer after the closing. Key employees related to selling shareholders are
generally included in this inquiry. If their shares of the earnout payment are not proportionate to
their ownership stakes, it is likely to be considered compensation.

If the earnout is considered compensation (rather than purchase price), there will also be
significant tax implications. Earnout payments considered compensation will be taxed to the
recipients as ordinary income, rather than as capital gain. The buyer will also need to withhold
Social Security, Medicare and federal and state income taxes from compensatory earnout
payments. ). If the earnout is paid in the buyer’s stock, rather than cash, the sellers may need to
advance cash to the buyer in the amount of the required withholdings before receiving the
buyer’s stock (which, if a private company, may be illiquid, and in any case, is likely to be
subject to securities laws and other transfer restrictions). The parties should give careful
consideration to the resulting tax treatment and potential withholding obligations when
structuring the earnout.

5. Calculating and Paying the Earnout

Another aspect of the earnout structure is the payout formula and method. The parties must
determine if there will be one earnout period and one payment, or multiple earnout periods
and/or multiple payments. If multiple earnout periods and/or payments are preferred, there are a
host of sub-issues that must be addressed during negotiations. For example, will the buyer pay
per period or make one cumulative payment at the end? If periodic payments are selected, will
they increase incrementally over time, remain constant, or decrease over time to reflect the
integration of the target into the buyer’s business and the resulting synergies?

Earnouts typically have a lifespan of between one and five years after the closing. The following
is a breakdown of the lifespans of earnouts from transactions closed in 2008:7

7 Source: American Bar Association 2009 Private Target M&A Deal Points Study

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

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• Less than one year: 4%
• One year: 26%
• One to two years: 4%
• Two years: 17%
• Three years: 17%
• Three to five years: 9%
• Five years: 13%
• More than five years: 9%

With regard to the method of payment, an earnout may stipulate a flat amount to be paid to the
sellers if the milestones are met. If the milestones are financial, however, the earnout payment
may be a certain percentage of the amount by which the target’s performance surpasses the
milestones. Cash is typically used as the earnout payment, but earnout payments can consist of
the buyer’s (or an affiliate’s) stock or notes, as well.

Earnouts typically are capped at an agreed-upon amount and the parties may also agree to a floor
on the payout. Possible timing variances over the earnout period(s) should be identified and
addressed, as well. For example, if the EBITDA milestone for the first year after the closing is
missed, but in later periods the target exceeds the EBITDA milestones, will the target have to
make up for the prior deficiency before the sellers receive a payment? Should there be a “true
up” at the end of the earnout arrangement? On the flip side, if the EBITDA milestone is
achieved in the first year (perhaps because the sellers had a lot of “cushion” in their projection)
and the earnout payments were “front-loaded,” but the target misses the milestones in later
periods, can the buyer recover “excess” payments made early on? To this end, the buyer may
want to negotiate for periodic payments at a lower payment percentage than will ultimately be
applied, in order to limit its risk of having overpaid if there end up being future performance
shortfalls.

The use of the buyer’s stock for making an earnout payment raises potentially significant
valuation, securities law and tax issues. Buyers will need to establish what rights and obligations
the sellers will have once the shares are received, taking into account Securities Act of 1933
restrictions, registration rights, holdback periods, drag-along requirements, repurchase rights,
tag-along rights and voting requirements.

Additionally, the parties must agree on when and how the shares will be valued. The shares can
be valued as of the closing date of the original transaction, the date as of when the earnout
performance is determined, or the date on which the earnout payment is actually made. If either
of the latter two dates is used, the parties must agree on whether the shares will be valued before
or after giving effect to the target’s contribution. Buyers sometimes seek to use the higher of the
market price used for the fixed consideration and the market price at the time of eventual
issuance. Sellers should resist this, possibly by demanding the lower of the two values in order to
cause a standoff that will tilt the negotiations back to a single price criterion. If the parties agree
to a share price fixed at the market price at closing, the seller should insist on anti-dilution
protection against stock splits and dividends. When negotiating the payout, buyers should keep
in mind that for the purposes of calculating goodwill subject to amortization, accounting rules

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

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value the earnout shares on the basis of their fair market value when ultimately issued. As a
result, the buyer could be exposed to a significant discrepancy between the value at which the
shares are issued and the amount the buyer must report for financial reporting purposes.

Yet another layer of complexity is added if the buyer is a private company and shares are to be
valued at a date or price other than the value used at the closing of the original transaction. In
such a case, the parties must agree on who will value the buyer’s stock being used as
consideration and, perhaps, the standards to be used for the valuation. While negotiating the
earnout, the parties will have to determine if the sellers will accept the buyer’s board of
directors’ “good faith” valuation or demand an independent valuator.

In addition, original issue discount rules require that some portion of deferred consideration paid
in stock be allocated to interest, reportable as such by the sellers and deductible as such by the
buyer. This portion will be taxed to the seller as ordinary income. The remainder of the stock is
generally treated as additional purchase price. In either case, the seller has to pay taxes on the
shares in cash and out-of-pocket, unless the shares are freely tradeable public company shares
that are not subject to any legal or other restrictions.

Due to the number of issues at play, disputes regarding earnouts are common. As a result, parties
may wish to include in their earnout arrangement a specific means for resolving disagreements.
For example, the agreement may include a provision stating that disputes over the measurement
or calculation of earnouts that are not promptly resolved will be turned over to an independent
accounting firm, whose resolution of the matter will be final and binding. The parties may also
pre-select an arbitrator skilled and experienced in earnout disputes, or establish the choice of
forum and procedures ahead of time. Resolving these issues during the negotiation of the
earnout can expedite the resolution of conflicts if and when they arise – but it can also
complicate the negotiation and drafting of the acquisition agreement.

Conclusion

Armed with this knowledge, the CEOs of ABC Co. and XYZ Co. can confidently structure a
thorough and fair earnout arrangement that bridges the $15/share valuation gap and ultimately
leads to the closing of the transaction. Each understands there are significant costs that come
along with negotiating and drafting earnout provisions, monitoring performance, calculating
earnouts and administering payouts. They know that earnout arrangements have great potential
for engendering future disputes and can delay and complicate the acquisition process.
Nevertheless, a properly structured earnout provision can bridge the gap between differing
financial predictions and what ABC Co. and XYZ Co. consider a reasonable purchase price. A
deadlock caused by disagreement over the value of XYZ Co. need not end with the parties
walking away from the table. An earnout can offer each party a way to mitigate the risks of the
deal, thereby allowing the transaction to be completed. It can protect ABC Co. from overpaying
if XYZ Co. falls short of expectations and reward XYZ Co. if its business turns out to be a
winner.

If an earnout strategy seems to be the solution for your deal and you are seeking guidance please
feel free to contact one of the authors for assistance specific to your opportunity.

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

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Contacts: Katten Muchin Rosenman LLP
Maryann A. Waryjas, Partner
Plante & Moran, PLLC [email protected]
John P. O’Connor, Partner 312-902-5461
[email protected]
312-602-3516

P&M Corporate Finance LLC
Scott P. George, Managing Director
[email protected]
312-602-3613

© Maryann A. Waryjas, Scott P. George and John P. O’Connor, January 2011. All rights reserved.

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