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Strengthening Outcomes: Impact and Financial Value at Exit

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Morrison Foerster and ICM Institute, a nonprofit research arm of the Impact Capital Managers (ICM), a membership association of leading private capital funds, published a new report

We are Morrison Foerster — a global firm of exceptional credentials. Our clients include some of the largest financial institutions, investment banks, and Fortune 100, technology, and life sciences companies. Our lawyers are committed to achieving innovative and business-minded results for our clients, while preserving the differences that make us stronger.Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Prior results do not guarantee a similar outcome.

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<div>Morrison Foerster and ICM Institute, a nonprofit research arm of the <a href="https://www.impactcapitalmanagers.com/about-us" target="_blank">Impact Capital Managers</a> (ICM), a membership association of leading private capital funds, published a new report, “Strengthening Outcomes: Impact and Financial Value at Exit,” the second in a series that explores different aspects of impact investing and how an impact-focused approach can generate alpha for investors.</div>The report focuses on the impact-specific drivers that most influenced exit outcomes for ICM portfolio companies as well as specific considerations that impact investors face at exit. ICM Fellow Divya Walia, a dual-degree MBA/MIA Candidate at Columbia Business School and SIPA, was the lead author for the report under the direction of Susan H. Mac Cormac, Global Co-chair of the Environmental, Social, and Governance (ESG) and Social Enterprise + Impact Investing practices at Morrison Foerster.Susan adds: “Impact investors and all market participants should be encouraged by these findings. Our study shows that it is certainly possible to structure an exit event that not only achieves an investor’s impact goals but meets or exceeds financial expectations and avoids greenwashing. As exits involving impact investing have become more prevalent, the sophistication of effective legal tools to protect impact at exit has evolved as well. Impact investing in the private markets can and should result in positive outcomes, both for the investor and for society at large.”The report shows that almost two-thirds (65%) of impact exits meet or exceed financial performance expectations. This first-of-its-kind study draws on a sample size of 230 exits from ICM members, each of which manages a market-rate impact fund and is therefore uniquely positioned to provide data and insights into the success of impact exits and the key drivers of that success.Read the <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blt791c5c59fa98b242/230508-strengthening-outcomes-impact.pdf" target="_blank">full report</a>. Learn more about MoFo’s <a href="/capabilities/environmental-social-governance" target="_self">ESG</a> and <a href="/capabilities/social-enterprise-impact-investing" target="_self">Social Enterprise + Impact Investing</a> practice strengths.Morrison Foerster and ICM also published a related report in April 2021 that focused on “Legal Innovation in Impact Investing” and explored the variety of legal tools and processes used by private capital investors to protect and enhance investments. Read the <a href="/resources/insights/210422-legal-innovation-in-impact-investing" target="_self">April 2021 report</a>.

Strengthening Outcomes: Impact and Financial Value at Exit

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Susan (“Suz”) co-chairs the ESG + Sustainability and Social Enterprise + Impact Investing practices. Her practice focuses on late-stage financings, secondaries, and other corporate transactions for investors, such as SoftBank and Temasek, and on investments for some of the top investors dedicated to impact, from “impact first” foundations to family offices to private equity funds. She co-led the drafting group for the first of the new corporate forms (the Social Purpose Corporation in California), has created hybrid/tandem corporate structures and crafted debt and equity instruments that blend impact with traditional financial terms, and has used corporate law to develop creative capital market solutions to pressing environmental problems. She also advises the boards of public and private companies on corporate governance and fiduciary duties as applied to sustainability and climate change.She was named a California Lawyer Attorney of the Year (CLAY) in 2012 and 2016 by Daily Journal and the Most Innovative Lawyer in North America in 2015 by the Financial Times.Leading Business AdvisorA powerhouse negotiator, clients note that “you cannot get a better corporate counsel” and that Suz “understands the big picture, could not be more responsive, and understands the business” (The Legal 500 US). She has extensive experience providing corporate and finance advice to companies and investors in connection with growth equity financings and secondaries, with particular experience in late-stage investments that have come to rival traditional strategic acquisitions in size and significance. Her experience includes leading some of the highest-profile late-stage investments over the past few years, including notable transactions for SoftBank Group (in the two largest private tender offers in history) in its $7.7 billion investment in Uber, $4.4 billion investment in WeWork, further $10 billion investment in WeWork, $1 billion investment in SoFi, and $250 million investment in Kabbage. She has also advised Temasek on its $800 million investment in Verily Life Sciences, Intel on its equity investment in Cloudera, and each of Fortress, TPG Rise, Vision Ridge Partners, Generation Investment Management, and Pontifax AgTech in numerous mid- to late-stage investments in clean technology, sustainability, education, food, and agriculture technology.Social Enterprise and Impact InvestingSuz is the go-to legal resource for social enterprises (for-profit and non-profit companies focused on social or environmental purpose), impact investors (investors interested in social or environmental returns), and mainstream companies developing environmental, social, and corporate governance policies. With deep expertise in the impact investing model, institutional investors exploring the space turn to her for creative solutions and her ability to structure both investments and companies to emphasize impact and returns.She represents a wide range of investors who are focused on impact, from foundations like the Gates Foundation, The Nature Conservancy, and The Rockefeller Foundation, to family offices like Armonia, Cornerstone Capital, Emerson Collective, New Island Capital, and Omidyar Network, to private equity funds like Goldman Sachs, TPG Rise, Vision Ridge Partners, and Generation Investment Management, in their equity investments in companies and projects that are focused on generating impact and returns for investors. She has deep experience and expertise ensuring energy, sustainability, and other investments have positive impact through the use of new corporate forms, hybrid or “tandem” structures with non-profits and for-profits, and alternative debt and equity instruments.Notable work in this space includes the establishment of a tandem structure, The Carbon Endowment, to retire coal assets at scale while securing a revenue stream for community reinvestment and job training in coal communities. Suz also advised on the structuring of Common Sense Growth as an extension of the non-profit Common Sense Media (to invest in companies that address issues related to children, education, and technology), the establishment of a fund for TPG Rise to provide debt financing to Echoing Green fellows, the spin-out of PRX from Public Radio International (to generate new revenue flows up to the non-profit), the establishment of a for-profit joint venture with non-profit Medicines360 (to allow the non-profit to distribute its healthcare products to women in the developing world), and the structuring of a for-profit evergreen fund that allows The Nature Conservancy to aggregate return-seeking and donor capital in order to invest in preserving our natural resources. She has also advised numerous clients on converting to a public benefit corporation or social purpose corporation model (which requires balancing traditional fiduciary duties against a social or environmental purpose), including This American Life, Revolution Foods, Rise Labs, and Beneficial State Bancorp.Suz also regularly advises boards of directors of private and public companies, special committees, and CEOs on corporate governance, particularly the intersection of fiduciary duties with sustainability, and focuses on environmental, social, and governance issues.Unmatched Cleantech and Renewable Energy ExperienceIn addition to founding and chairing the firm’s Social Enterprise and Impact Investing Group, Suz serves as Chair of Morrison & Foerster’s Energy Group and has extensive experience representing start-up to late stage private companies in the clean technology or sustainability space. She provides corporate and finance advice in connection with equity and debt financings, mergers, acquisitions, asset purchases and sales, reorganizations, and joint ventures. She has experience working with renewable energy start-up companies and renewable energy developers in the solar, wind, and biofuels industries. Suz has assisted renewable energy start up companies with raising venture capital and has advised renewable energy developers on project acquisitions.Suz’s representative renewable energy, cleantech, sustainable, and social enterprise clients include Anaergia, Change.org, EDF Renewables, E.ON, Etsy, First Look, OneSun, Planet Labs, Rising Sun Energy, RSF Social Finance, SustainBio, Trelys, Inc., Wikipedia, and Xpansiv.Board Activity and Thought LeadershipMs. Mac Cormac was a founding board member of the Sustainability Accounting Standards Board (SASB), is a member of the board of directors of Business for Social Responsibility (BSR), the Ceres President’s Council, and the Earth Genome Project, and is an advising board member of the Committee Encouraging Corporate Philanthropy’s Strategic Investor Initiative.She has joined the faculty (teaching on the intersection of sustainability and fiduciary duties) at both the Stanford Director’s College and the Northwestern Corporate Counsel Institute and is an adjunct professor at UC Berkeley School of Law, teaching a course on Social Enterprise.

Susan Mac Cormac

Partner

Michael Santos is an associate in the San Francisco office of Morrison Foerster and a member of the firm’s Transactions Department. Michael is a member of the firm’s Social Enterprise and Impact Investing Group.Michael counsels startup to late-stage private companies, venture capital and private equity investors, as well as family offices, private foundations and public charities in a broad range of transactional matters including early-stage and late-stage equity and debt financings, mergers, acquisitions, asset purchases and sales, joint ventures and hybrid or “tandem” structuring arrangements between non-profit and for-profit entities.Prior to joining Morrison Foerster, Michael was an associate at another international law firm, where he counseled clients on mergers and acquisitions and all aspects of corporate governance.Michael also serves as the president of The Futures Project, a private foundation that focuses on promoting education, youth development and juvenile justice in the Bay Area and Boston.

Michael Santos

Associate

Daniel Irvin is a corporate associate in the San Francisco office of Morrison Foerster. He represents clients on a broad range of transactional and corporate matters, including the formation of emerging companies, venture capital financings, mergers and acquisitions, corporate governance, and strategies for integrating ESG and impact goals into their businesses. He has represented both sellers and buyers in mergers and acquisitions. Daniel has also advised both sponsors of private funds throughout the fund formation process, as well as LPs in their primary and secondary fund investments.Prior to joining the firm, Daniel was a Summer Law Clerk in the Office of the General Counsel for the San Francisco Bay Area Rapid Transit District (BART).