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HOW DO WE PROACT, TRANSACT, AND ENACT? For our 2024 Spring/Summer Investor Update, we interview our legal partners at Morgan Lewis and Lawyers for Civil Rights.
In light of 2023’s record disbursement of loans and investment capital from the Ujima Fund ($1.6 million out of the door and invested in our local businesses, by community demand), we want to pull the curtain back on how these investment transactions happen. Key to Ujima’s processes are our technical assistance partners. ‘Technical assistance,’ a wonky and sterile phrase, refers to support to help nonprofits acquire any specialized service or skill that is not currently resident within the organization. In this update, we highlight our legal technical assistance partners at Morgan Lewis.
Benjamin Stein, a partner in Morgan Lewis’s Boston office, represents public and private companies in a variety of corporate transactional matters, including mergers and acquisitions, private equity and debt financings, and US Securities and Exchange Commission (SEC) registered securities offerings. He counsels public companies with respect to securities disclosure issues, corporate governance matters, New York Stock Exchange (NYSE) and Nasdaq compliance issues, and reporting obligations under the Securities Exchange Act of 1934. Ben also has experience representing both companies and underwriters in a variety of capital markets transactions.
UJIMA: How would you like to introduce yourself— and what's your relationship with Ujima?
BEN STEIN: My name is Ben Stein, and I am a partner in the corporate group in the Boston office of Morgan Lewis. I practice primarily in mergers and acquisitions, and I worked with the Boston Ujima Project on their investment in the Bay State Banner starting in September of 2023 (my first of hopefully many interactions with the Ujima team). We went back and forth with the Bay State Banner on a handful of commercial and legal items and were able to come to alignment and closing in the first week of February.
How do your skills and experiences as a lawyer translate to projects like the Bay State Banner investment?
The transaction we processed for Ujima with the Banner is precisely what I do in my day-to-day practice. We help companies find working capital in exchange for debt or equity, and we deal with the negotiation of transaction documents– every investor who puts in capital expects to get certain rights associated with that. At the same time, every company who receives capital from a third party views the relationship as a partnership, but they want to retain as much control of the company as possible. So there's a delicate balance between the investor and the company– and that’s what we helped Ujima to work through with the Bay State Banner.
It is so gratifying to do deals in Boston that are benefiting communities. It's nice to work with a client team and to fund a target company where the transaction means a tremendous amount. And there's hope that we're planting a seed and it's going to grow and benefit us all.
What benefits does Morgan Lewis’s technical assistance bring Ujima in our investment process?
Taking a huge step back: in order for a company to be successful, it needs working capital–roughly, cash/liquid money– which can be generated in a handful of different ways. One is by simply operating a company in a profitable way- where a company’s operating revenue is greater than its operating costs. But sometimes companies are at a stage where they're not generating profits; or a company wants to grow its profits. In these cases, a company may sell a part of themselves– an ownership stake in themselves– to obtain capital; in other words, they seek investment. Part of what we do is try to identify companies who can benefit from this kind of investment or co-ownership.
To continue with the earlier example, Bay State Banner was raising funds. They have a business and purpose that is consistent with Ujima’s investment thesis, so we essentially said, “Yeah, we'd love for Ujima to help you access capital. We think there's a potential upside in investing in you because we think you're undervalued and this investment could lead to value accretion.” But we had to make sure that the Bay State Banner and Ujima properly memorialized their relationship on a post-closing basis, specifically with respect to economic preferences and governance. We also made sure that Ujima has some say in the company, and some understanding of what management is doing with Ujima’s investment, which meant negotiating some management rights as part of this investment.
So a lot of our negotiation with Bay State Banner regarded the rights that Ujima gets as a result of Ujima’s investment, and the value that Morgan Lewis added was assisting Ujima in identifying and obtaining those rights that it cared most about.
Thank you for going into depth. What brought you to working with Ujima and working on the Bay State Banner investment?
There's two main reasons. One: Morgan Lewis has a culture of pro bono representation. It's really pushed, it's something we believe in fundamentally: that we need to be present in the communities we serve. There's a requirement that every single attorney at Morgan Lewis record a certain amount of pro bono hours– Morgan Lewis really puts its money where its mouth is. So everybody at the firm is always looking for pro bono hours, and typically pro bono comes in the form of litigation: asylum cases, immigration cases, domestic abuse cases, all dealt with in court. I, as a corporate attorney, am trying to stay as far away from court as I possibly can. The only time I've ever been in court was in South Boston fighting a speeding ticket [laughs], it’s just not my practice; so it's really nice when we can get our hands on a pro bono matter that is consistent with my type of practice. I say that because I really know what I'm doing, so I can add a tremendous amount of value when working with pro bono clients like Ujima because it’s the same kind of work that we do for our paying clients.
Two: this also seemed like a great opportunity for local work. I grew up in Canton, which isn't far from Boston. I've lived here for a very long time, and it's nice to get a transaction within the city of Boston. We're a global law firm, and we have more than 30 offices, so we're doing deals in different countries and different jurisdictions–but I love it when there's a local flavor. Carl Valenstein, who has a really strong relationship with Ujima, is also a mentor of mine; he brought this to my attention, so I was all in.
How do you envision this partnership between Ujima and Morgan Lewis helping Boston communities steer their economies?
I really believe in Ujima’s mission; I think we're genuinely and fundamentally doing the right thing in our shared work. If we can get good investors standing behind good, solid companies within the local community, if we can continue to help provide seed funding to local organizations, if we can help Ujima expand their network so that Ujima is now sitting on boards and providing advice to these entrepreneurs, that’s powerful. Ujima as a fund is an investor that is fundamentally and genuinely engaged in the community, putting their cash into equally engaged startups, and that will have a snowball effect on the local economy from my perspective. That's the hope.
Are there any standout moments that you've had in your time working with us?
Absolutely. On the Bay State Banner transaction I worked with a senior partner in our Boston office, Andrew White. He and I work together closely on a number of matters, and the clients with whom we typically interact are incredibly sophisticated, and do deals of all sizes every single day. Working with a client like Ujima on a project like this was great; the interaction that we had with the fund team to discuss certain deal topics, why we thought they were important, why we thought some were less important, why we needed to defer, etc, were all generative conversations. I really enjoyed the collaborative nature of the engagement and of working with you all.
What excites you about this work?
Not to belabor the point, but it really is so gratifying to do deals in Boston that are benefiting communities. It's nice to work with a client team and to fund a target company where the transaction means a tremendous amount. And there's hope that we're planting a seed and it's going to grow and benefit us all. ✦
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