Deal-making is back in styled and the letters “M” and “A” for mergers and acquisitions are again gracing the headlines. Those headlines also belong to publications focused on law:
- Wall Street Journal: Elite Law Firms Dominate as Deals Proliferate
- Bloomberg: Skadden Tops H1 Global M&A Rankings: Business of Law
- Texas Lawyer: Deal of the Week: $21.4 Million Merger
Mr. Pacchia interviews Frank Aquila, a partner at Sullivan & Cromwell, who also pens a column for Businessweek, about the resurgence of M&A deals and what it means for law firms. The interview is embedded nearby and runs just about 11 minutes.
Characteristics of H1 M&A deals in 2014
- Slower deals. Deals have risen, but corporations remain cautions about getting deals done. Mr. Aquila says it’s because businesses are taking their time in performing due diligence and the negotiation process is lasting longer.
- Easier on billable hours. The slower process means legal work on these deals is easier to pace and getting done “upfront.” This as opposed to the race – or the “mad dash” – to complete them under the compressed timelines characteristic of a pre-recession era.
- Deal financing. While corporate cash levels remain at record highs, many of these deals are being completed with stock, or a combination of cash and stock. Mr. Aquila offers three rationales:
- Tax purposes
- The acquiring company believes there’s an upside in the acquired company
- Businesses still have access to borrowed money at low rates
What areas are ripe for M&A?
Mr. Aquila sounded upbeat “across the board” on the potential for more deals. He suggested the focus would remain on domestic deal-making – however he also noted we’ve seen more and more cross-border deals (it’s worth noting geo-political events remain a concern). Two vertical industries he thinks will have strong showing for the foreseeable future will be healthcare and technology.
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What thoughts do you have on the resurgence of M&A and the impact on the business of law?
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