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Front Page - Friday, June 26, 2020

Sharber finds fit in, away from practice




Hugh and Virginia Anne Sharber met at the University of Tennessee at Knoxville College of Law. Hugh later moved to Chattanooga to marry Virginia Anne, who is executive director of Hunter Museum of American Art. - Photograph provided

Many trial attorneys are known for their captivating tales of courtroom skirmishes and edge-of-seat verdicts. They enjoy spinning a good yarn about a last-minute revelation in a murder trial or an outrageous testimony in a divorce case.

But Hugh Sharber suspected he was better suited to a business practice early in his search for a place in the hallowed corridors of the law.

“I realized some people are naturally combative and want the give and take of litigation, but personality wise, I liked the idea of finding a win-win,” Sharber says. “Business negotiations can be combative, too, but for the most part, if you do your job correctly, both parties will get what they want, so I gravitated toward that.”

That choice did not disqualify Sharber from storytelling sessions with his fellow attorneys. Rather, after 35 years of a diverse business law practice at Miller & Martin in Chattanooga, he has amassed a collection of tales that suggest transaction attorneys experience their own brand of twists and turns while working with clients.

Sharber, 61, rewinds his memory to the 1990s, when he helped to represent a consumer products company that was experiencing high yields.

To reward its shareholders, the company did a leveraged recap, a transaction in which a business borrows a large sum of money and then distributes it to its shareholders, who retain ownership of the company.

Sharber says a leveraged recap can be a dicey move, but it can also be substantially rewarding for the shareholders of a profitable business. Shortly thereafter, however, the company suffered an unforeseen hiccup.

“The financial advisers for this company had said the leveraged recap was a way of having your cake and eating it, too,” Sharber says. “But what did your mother tell you about having your cake and eating it, too? It’s not possible.”

To wriggle out of the dilemma, the company asked Sharber and his colleagues to help with a high-yield debt offer, another novel transaction he has rarely seen used.

“I didn’t know of anyone in Chattanooga who had done one, and I don’t know of anyone here who’s done one since,” Sharber notes. “But it was another risky maneuver.”

This time, however, the company’s gamble paid off, Sharber says. After raising capital, disposing of some “recalcitrant shareholders” and sustaining control of the business, the company was able to purchase more brands, grow its business and become a tremendous success.

The experience taught Sharber there’s no such thing as a risk-free move in the business world. “You have to either account for the unknowns or be creative enough that you have the means to deal with them if they happen.”

Having told one illuminating tale, Sharber shares another that happened on the cusp of the Great Recession in 2008, when he was representing an entrepreneur who had developed a successful incentive and gift solutions business.

“He had built his business to a point where he felt like it was time to sell it,” Sharber recalls. “We had negotiated a binding agreement and were within weeks of closing when Lehman Brothers failed in September.

“The private equity firms that were buying his business came back with a weak rationale to purchase it for less money. It was still a handsome price, though, so he accepted the reduction.”

A few weeks later, on the eve of closing, the buyers asked Sharber’s client to slice another $5 million off the purchase price. Unlike the first change in the offering, they didn’t even bother with the pretense of a reason.

“I wanted to tell them to pound sand because there was no rationale for it,” Sharber continues. “But my client said it was still a handsome price, and there was some uncertainty in the economy, so he accepted the lower offer and we completed the sale.”

Looking back, Sharber is relieved he checked his instincts and did what his client wanted.

“Had we not done the deal at that time, it would have been several years before a sale in that price range could have been completed because of the dip in the market,” he asserts. “So, accepting the buyer’s price and pushing through to complete a sale is sometimes the correct thing to do.”

Diverse practice

Over the years, Sharber has developed a business law practice focused on three areas, including mergers and acquisitions, capital-raising transactions and providing counsel on the legal aspects of business decisions.

The mergers and acquisitions component of Sharber’s practice has placed him within the sphere of major national and international companies. For example, in 2006, he helped a client acquire a selection of consumer product brands that became available during the merger of Johnson & Johnson and Pfizer.

“The Federal Trade Commission said the companies had to divest some of their consumer product brands in order to complete the merger, so they held an auction,” Sharber says. “Our client really wanted these businesses and viewed them as a way of catapulting forward in terms of size and access to markets.”

Although the financial worth of the brands gave Sharber pause, he knew the true value of the deal was found in the other ways the brands would impact the buyer’s business.

“I learned that holding your ground and doing the things we as attorneys typically advise clients to do was secondary to doing what was necessary to be the successful bidder,” he says. “So, we gave up some things we would normally want to include because it made our bid more favorable.”

Being a part of buying and selling companies has also exposed Sharber to one of the most difficult outcomes of a business deal: Seeing employees lose their jobs when a company changes hands.

But it has also allowed Sharber to observe and participate in the sometimes unexpectedly humane aspects of doing business.

“We have a company that’s acquiring a manufacturing facility,” he begins. “The long-term plan would be to bring the business to Chattanooga, which would be bad for the people the plant employs.

“That’s difficult, but we’re taking steps to do it in a way that’s as friendly as possible toward the workers at the plant, partly to preserve the goodwill of the business but also because it’s the right thing to do.”

Sharber adds that if the company doesn’t acquire the plant, it might not survive, or someone less inclined to treat the employees favorably might buy it.

“That’s one of the hard realities of business,” he continues. “But every client I have worked with has wanted to do the right thing. They had obligations to various constituencies – including investors, shareholders and banks – but they also wanted to be humane.”

Sharber has helped a wealth of different businesses, management teams and investment strategies raise capital during his years of practice. And he says he enjoys the variety.

“One of our clients is in the senior care business. We help them to secure capital, and then they build and run a facility and eventually pay their investors an attractive rate of return,” he says. “One of the best things about what I do is the insight I gain from working with clients in different industries.”

Sharber makes his role as a business counselor sound easy, but it’s likely beset with the same kinds of surprises he’s experienced while managing mergers and acquisitions.

“I basically have to answer whatever question the person on the other end of the phone asks,” he says with a laugh.

Developing a practice

Sharber is part of the corporate practice group at Miller & Martin, a collective that involves many different kinds of attorneys. Working with him are seasoned lawyers such as Scott McGinness and Mark Degler, who do work similar to his, and younger attorneys like David Spiller, T.J. Gentle and April Holland (who was profiled in the Aug. 24, 2018, issue of the Hamilton County Herald).

“This is not a one-person business practice,” Sharber stresses.

Sharber came to Miller & Martin in 1985 after practicing in Nashville for one year. At that time, the firm was home to several of what he says were “lions of business law,” including Guy Beatty, Joe Richardson and Lowry Kline.

These attorneys represented historic companies whose names still resonate throughout the city, including American National Bank (which became SunTrust), JTL Corporation (John Lupton’s famous Coca-Cola bottler) and Volunteer State Life Insurance Company.

Sharber says it was a great time to learn the business practice of law. “You don’t leave law school knowing how to represent business clients; you learn these things from practicing with other attorneys.”

Sharber’s earliest memories of lawyers took shape in his hometown of Murfreesboro, where he grew up in the shade of Middle Tennessee State University.

While Sharber has no memory of there being any business attorneys in Murfreesboro, he does recall the presence of a number of generalists, including Wilkes Coffey, Jr., who invited a young Sharber to the courthouse to watch him co-defend a murder suspect with Watergate prosecutor Jim Neal.

Watching the trial introduced Sharber to the setting of the law, while the attorneys he knew showed him the character of those who practiced it, including his grandfather and the fathers of two neighborhood friends.

These men influenced Sharber as he came of age in the 1970s and began to contemplate a career in either journalism or the law. “I respected them and thought if I could be like them, then the law would be a profession worth pursuing,” he says.

Sharber decided his future lie not in courtrooms but the less combative arena of transactional work while taking classes at the University of Tennessee at Knoxville College of Law. An internship at the Nashville firm of Waller, Lansden, Dortch & Davis cemented his thinking.

“Waller was built primarily for business law,” he remembers. “That confirmed my suspicions that I was best suited for a business practice.”

Enter Virginia Anne

When Waller offered Sharber a job before graduation, he accepted it. But there was a hitch.

During law school, Sharber had started dating a young woman from Chattanooga named Virginia Anne Summitt, whose father was Bob Summitt, a circuit court judge in Hamilton County.

After graduation, Virginia moved home to work for Miller & Martin and Sharber moved to Nashville to practice at Waller, but they continued to date. They then became engaged without knowing where they would live after getting married.

“Waller had arranged for Virginia to work at Hospital Corporation of America as an in-house attorney if she moved to Nashville,” Sharber says. “So, we had to decide where we were going to live.”

Eventually, it became apparent to Sharber that his wife-to-be wanted to stay in Chattanooga. Fancying her more than Waller and Music City, he migrated south. “I also liked Chattanooga and the people at Miller & Martin,” he says.

Family man, volunteer

Sharber has been more than a business attorney and husband since moving to Chattanooga; he’s also been a father.

He smiles as he discusses his children, the oldest of which is Evan, who followed in his parents’ footsteps to become an attorney at Baker Donelson in Chattanooga. “On some level, his mother and I probably inspired him to become a lawyer, although he did resist it,” Sharber says.

Sharber and his wife – who’s now known as Virginia Anne Sharber and is the executive director of Hunter Museum of American Art – also have two daughters. Kate lives in Nashville and works for a women’s clothing manufacturer, and Meg resides in Cincinnati, Ohio, and works for a specialty cheese shop, Sharber says with both the pride and relief of a parent whose children are grown and living lives of their own.

A more recent addition to Sharber’s family, courtesy of Evan and Evan’s wife, made him a grandfather to a baby girl – another role he relishes.

It is with reluctance, however, that Sharber mentions his community work. Although he served on the board of the Chattanooga Opportunity Fund in early 2000s, functions as chancellor of St. Paul’s Episcopal Church and is a trustee at Sewanee: The University of the South, his undergraduate alma mater, he says Virginia Anne’s volunteer efforts tower over his own.

“My wife has been very active in the community, so if I can take some of the credit for what she does, we do quite a bit,” he says with a laugh. “She does much more than I do, and the community is probably better off for it.”

Client perspective

Although trial attorneys sometimes shape a story to emphasize their skill and cunning, Sharber narrates past events in way that underscores the lessons he learned. Similar to his self-deprecation when describing his volunteer work, he’s a humble storyteller.

Bob Bosworth, former COO, CFO and president of Chattem, feels no need to temper his admiration of Sharber, who served as outside general counsel for the company during Bosworth’s long tenure there.

“Hugh always made a remarkable effort to fully understand the businesses with which he was involved,” Bosworth says. “This allowed him to effectively work through any issues and enabled his discussions with both Chattem and the sellers of businesses to focus on the key issues rather than legal elegance.”

Bosworth also commends Sharber for his attentive ear when listening to both Chattem and the people on the other side of a transaction. “This allowed Hugh to sort through the important points and provide guidance on which things we should deem as important.”

Bosworth was also impressed with Sharber’s ability to take a position of strength on important issues without creating an adversarial environment.

“I’ve been involved in too many situations over too many years in which the lawyers for the parties created more useless noise, which had a deleterious rather than a positive impact on the transaction,” Bosworth adds.

Partly due to Sharber’s representation, Chattem became “a partner of choice in the mergers and acquisitions environment,” says Bosworth, who claims one seller praised the company for the “speed and certainty” of the negotiations.

Bosworth reserves his highest adulation, however, for both Sharber and his wife. “Hugh and his wife Virginia Anne are incredibly meaningful contributors to the Chattanooga community,” he says. “In some cases, community participation by professional service providers is little more than thinly veiled business development efforts, but Hugh and Virginia Anne really care about Chattanooga and the people in it.”

Allen Corey, the founder and president of SquareOne Holding Company, is equally effusive in his assessment of Sharber. Corey and Sharber practiced law together at Miller & Martin for 10 years, and then Sharber served as Corey’s attorney when his colleague left the practice of law to start SquareOne.

During this time, Sharber served as the company’s lead lawyer in acquisitions, financings and corporate events. He also handled SquareOne’s business interests with law firms in New York, Los Angeles and Atlanta and “stood equal with every attorney,” Corey says.

“I turn to Hugh when we need thoughtful but clear advice on complex topics,” Corey maintains. “He’s a trusted and valued adviser, and we won’t proceed with any matter of significance without his input.”

More importantly, Corey adds, Sharber is “a person of great integrity and beyond reproach.”

Since arriving at Miller & Martin 35 years ago, Sharber has developed an active practice, ascended to partner at the firm and served on a management committee.

He has also continually adapted to the changing business climate. For example, when he began practicing at Miller & Martin, most of the firm’s business clients were operating companies that were making strategic acquisitions.

But today, private equity firms drive most business transaction activity, Sharber says, so he and his associates often represent clients who are making financial investments in many different industries.

Sharber hopes to begin passing on both the nuggets of old-line wisdom he’s acquired over the years and the tactics he more recently learned to the younger attorneys at Miller & Martin, who will someday carry the torch Beatty, Richardson and Kline handed to him.

“Like my mentors did for me, I very much want to do for the David Spillers, T.J. Gentles and the April Hollands of this firm,” he says. “As a young lawyer, I felt like it was my responsibility to do everything. I now know those senior lawyers were watching carefully, although I didn’t feel that way.

“You have to give young lawyers responsibility, because that’s how they learn, but also provide a safety net.”

A good start for Sharber would be to tell the newer attorneys the stories of the countless business transactions in which he’s had a hand and the lessons he learned from them. He has some great ones to share.