From TheDeal.com, May 22, 2009:
Dealmakers trying to cash in on companies hurt by the recession have been fighting with said targets over valuation issues. And they may be running out of time to do deals on the cheap. That was made evident in a white paper by Boston Consulting Group Inc., titled "The Clock Is Ticking: Preparing to Seize M&A Opportunities While They Last."
The paper says there are signs the M&A tide could soon turn as equity values stabilize and debt markets show life. BCG isn't urging dealmakers to rush into acquisitions, instead it offers a stress test of sorts about where a company stands in the M&A jungle.
According to a BCG analysis of 281 companies in the S&P 500, just one-fifth of them have a sufficiently robust balance sheet and other financial credentials to engage in M&A (the haves), while another fifth are now so weak and vulnerable that their only course of action is to focus on surviving the downturn (the have-nots).
The paper offers a "predator-prey matrix" to clarify a company's M&A strategy, mapping operational stability against financial stability.
Get to BCG's white paper here. - Baz Hiralal
Friday, May 22, 2009
Friday, May 15, 2009
Dealmakers Expect M&A Activity to Pick Up in Second Half of 2009
ACG-Thomson Reuters Mid-Year 2009 DealMakers Survey Reveals Obstacles and Opportunities for M&A and Private Equity Investing
- - - - - - -
Private Equity Firms Concentrating on Portfolio Company Improvements
CHICAGO, May 13, 2009 – Middle market merger professionals are close to unanimous as to the current state of the M&A market – it is not good. Yet most anticipate it will improve in the second half of 2009, led by distressed sales and by mergers in healthcare and life sciences, manufacturing and distribution, and financial services. The mid-year 2009 survey results were announced today at ACG InterGrowth, Wynn Las Vegas.
The latest twice-yearly survey of by the Association for Corporate Growth (ACG) and Thomson Reuters reveals the most negative outlook in the five-year history of the survey, with 88% of dealmakers saying the current M&A environment is fair or poor, compared to 86% in December 2008.
Over the next six months, the 703 middle market investment bankers, private equity professionals, corporate development officers, lawyers, accountants and business consultants polled expect the number of M&A transactions to:
Increase (56%)
Remain the same (34%)
Slow further (10%)
For links to the complete report, go to http://chapters.acg.org/global/default.aspx
- - - - - - -
Private Equity Firms Concentrating on Portfolio Company Improvements
CHICAGO, May 13, 2009 – Middle market merger professionals are close to unanimous as to the current state of the M&A market – it is not good. Yet most anticipate it will improve in the second half of 2009, led by distressed sales and by mergers in healthcare and life sciences, manufacturing and distribution, and financial services. The mid-year 2009 survey results were announced today at ACG InterGrowth, Wynn Las Vegas.
The latest twice-yearly survey of by the Association for Corporate Growth (ACG) and Thomson Reuters reveals the most negative outlook in the five-year history of the survey, with 88% of dealmakers saying the current M&A environment is fair or poor, compared to 86% in December 2008.
Over the next six months, the 703 middle market investment bankers, private equity professionals, corporate development officers, lawyers, accountants and business consultants polled expect the number of M&A transactions to:
Increase (56%)
Remain the same (34%)
Slow further (10%)
For links to the complete report, go to http://chapters.acg.org/global/default.aspx
Monday, May 11, 2009
Administration Plans to Strengthen Antitrust Rules
WASHINGTON — President Obama’s top antitrust official this week plans to restore an aggressive enforcement policy against corporations that use their market dominance to elbow out competitors or to keep them from gaining market share.
The new enforcement policy would reverse the Bush administration’s approach, which strongly favored defendants against antitrust claims. It would restore a policy that led to the landmark antitrust lawsuits against Microsoft and Intel in the 1990s.
Ms. Varney is expected to say that the administration rejects the impulse to go easy on antitrust enforcement during weak economic times.
She will assert instead that severe recessions can provide dangerous incentives for large and dominating companies to engage in predatory behavior that harms consumers and weakens competition. The announcement is aimed at making sure that no court or party to a lawsuit can cite the Bush administration policy as the government’s official view in any pending cases.
Ms. Varney is expected to say that the Obama administration will be guided by the view that it was a major mistake during the outset of the Great Depression to relax antitrust enforcement, only to try to catch up and become more vigorous later. She will say the mistake enabled many large companies to engage in pricing, wage and collusive practices that harmed consumers and took years to reverse.
See complete article at: http://www.nytimes.com/2009/05/11/business/11antitrust.html
The new enforcement policy would reverse the Bush administration’s approach, which strongly favored defendants against antitrust claims. It would restore a policy that led to the landmark antitrust lawsuits against Microsoft and Intel in the 1990s.
Ms. Varney is expected to say that the administration rejects the impulse to go easy on antitrust enforcement during weak economic times.
She will assert instead that severe recessions can provide dangerous incentives for large and dominating companies to engage in predatory behavior that harms consumers and weakens competition. The announcement is aimed at making sure that no court or party to a lawsuit can cite the Bush administration policy as the government’s official view in any pending cases.
Ms. Varney is expected to say that the Obama administration will be guided by the view that it was a major mistake during the outset of the Great Depression to relax antitrust enforcement, only to try to catch up and become more vigorous later. She will say the mistake enabled many large companies to engage in pricing, wage and collusive practices that harmed consumers and took years to reverse.
See complete article at: http://www.nytimes.com/2009/05/11/business/11antitrust.html
Thursday, May 07, 2009
SEC Enforcement: Past, Present and Future
by Dave Lynn, Editor of TheCorporateCounsel.net, May 7, 2009:
SEC Enforcement: Past, Present and Future
Before we all move on with the next phase of the SEC’s revived enforcement efforts, we still have occasion to review what may have helped get use into this mess. As reported in this Bloomberg story from yesterday, the GAO released a report at the end of March outlining the headwinds faced by the Enforcement Staff over the past several years. (Broc mentioned the report in the blog last month.) Today, the Senate Subcommittee on Securities, Insurance, and Investment of the Committee on Banking, Housing, and Urban Affairs will hold a hearing on strengthening the SEC’s enforcement responsibilities.
The Bloomberg story points out how the GAO found that the SEC instituted policies that “slowed cases and led enforcement-unit lawyers to conclude commissioners opposed fining companies.” As one unidentified Staffer put it, there was a feeling that the Commissioners prevented Enforcement from “doing its job.” The findings of the GAO’s report bear out my own experience during those years, not only with respect to Enforcement but also with respect to all other regulatory matters - hostility toward the Staff and its recommendations became institutionalized, which served to not only demoralize the Staff but also to result bad decisions being made at all levels.
The report also notes the use of executive sessions during former Chairman Cox’s tenure, where some Enforcement Staff were barred from participating. The report indicates that executive sessions occurred on 40% of the days when the SEC met to vote in closed Commission meetings in 2008, more than three times the rate in 2005 when Cox was appointed Chairman (but equal to the rate from 2003 and 2004).
As for the future of Enforcement, Chairman Schapiro reiterated her agenda for the Division of Enforcement in an address last week to the Society of American Business Editors and Writers. She noted that she has streamlined SEC enforcement procedures by no longer requiring full Commission approval to launch an investigation, and eliminating the need for approval by the full Commission before negotiating a settlement. She stated “before these directives, enforcement attorneys will tell you that they worried about red lights at every turn — now they see green.” This is sure to mean many more inquiries and, in all likelihood, much speedier cases as the - SEC Enforcement: Past, Present and Future
Before we all move on with the next phase of the SEC’s revived enforcement efforts, we still have occasion to review what may have helped get use into this mess. As reported in this Bloomberg story from yesterday, the GAO released a report at the end of March outlining the headwinds faced by the Enforcement Staff over the past several years. (Broc mentioned the report in the blog last month.) Today, the Senate Subcommittee on Securities, Insurance, and Investment of the Committee on Banking, Housing, and Urban Affairs will hold a hearing on strengthening the SEC’s enforcement responsibilities.
The Bloomberg story points out how the GAO found that the SEC instituted policies that “slowed cases and led enforcement-unit lawyers to conclude commissioners opposed fining companies.” As one unidentified Staffer put it, there was a feeling that the Commissioners prevented Enforcement from “doing its job.” The findings of the GAO’s report bear out my own experience during those years, not only with respect to Enforcement but also with respect to all other regulatory matters - hostility toward the Staff and its recommendations became institutionalized, which served to not only demoralize the Staff but also to result bad decisions being made at all levels.
The report also notes the use of executive sessions during former Chairman Cox’s tenure, where some Enforcement Staff were barred from participating. The report indicates that executive sessions occurred on 40% of the days when the SEC met to vote in closed Commission meetings in 2008, more than three times the rate in 2005 when Cox was appointed Chairman (but equal to the rate from 2003 and 2004).
As for the future of Enforcement, Chairman Schapiro reiterated her agenda for the Division of Enforcement in an address last week to the Society of American Business Editors and Writers. She noted that she has streamlined SEC enforcement procedures by no longer requiring full Commission approval to launch an investigation, and eliminating the need for approval by the full Commission before negotiating a settlement. She stated “before these directives, enforcement attorneys will tell you that they worried about red lights at every turn — now they see green.” This is sure to mean many more inquiries and, in all likelihood, much speedier cases as the Enforcement Division ramps up again.
...
- Dave Lynn
SEC Enforcement: Past, Present and Future
Before we all move on with the next phase of the SEC’s revived enforcement efforts, we still have occasion to review what may have helped get use into this mess. As reported in this Bloomberg story from yesterday, the GAO released a report at the end of March outlining the headwinds faced by the Enforcement Staff over the past several years. (Broc mentioned the report in the blog last month.) Today, the Senate Subcommittee on Securities, Insurance, and Investment of the Committee on Banking, Housing, and Urban Affairs will hold a hearing on strengthening the SEC’s enforcement responsibilities.
The Bloomberg story points out how the GAO found that the SEC instituted policies that “slowed cases and led enforcement-unit lawyers to conclude commissioners opposed fining companies.” As one unidentified Staffer put it, there was a feeling that the Commissioners prevented Enforcement from “doing its job.” The findings of the GAO’s report bear out my own experience during those years, not only with respect to Enforcement but also with respect to all other regulatory matters - hostility toward the Staff and its recommendations became institutionalized, which served to not only demoralize the Staff but also to result bad decisions being made at all levels.
The report also notes the use of executive sessions during former Chairman Cox’s tenure, where some Enforcement Staff were barred from participating. The report indicates that executive sessions occurred on 40% of the days when the SEC met to vote in closed Commission meetings in 2008, more than three times the rate in 2005 when Cox was appointed Chairman (but equal to the rate from 2003 and 2004).
As for the future of Enforcement, Chairman Schapiro reiterated her agenda for the Division of Enforcement in an address last week to the Society of American Business Editors and Writers. She noted that she has streamlined SEC enforcement procedures by no longer requiring full Commission approval to launch an investigation, and eliminating the need for approval by the full Commission before negotiating a settlement. She stated “before these directives, enforcement attorneys will tell you that they worried about red lights at every turn — now they see green.” This is sure to mean many more inquiries and, in all likelihood, much speedier cases as the - SEC Enforcement: Past, Present and Future
Before we all move on with the next phase of the SEC’s revived enforcement efforts, we still have occasion to review what may have helped get use into this mess. As reported in this Bloomberg story from yesterday, the GAO released a report at the end of March outlining the headwinds faced by the Enforcement Staff over the past several years. (Broc mentioned the report in the blog last month.) Today, the Senate Subcommittee on Securities, Insurance, and Investment of the Committee on Banking, Housing, and Urban Affairs will hold a hearing on strengthening the SEC’s enforcement responsibilities.
The Bloomberg story points out how the GAO found that the SEC instituted policies that “slowed cases and led enforcement-unit lawyers to conclude commissioners opposed fining companies.” As one unidentified Staffer put it, there was a feeling that the Commissioners prevented Enforcement from “doing its job.” The findings of the GAO’s report bear out my own experience during those years, not only with respect to Enforcement but also with respect to all other regulatory matters - hostility toward the Staff and its recommendations became institutionalized, which served to not only demoralize the Staff but also to result bad decisions being made at all levels.
The report also notes the use of executive sessions during former Chairman Cox’s tenure, where some Enforcement Staff were barred from participating. The report indicates that executive sessions occurred on 40% of the days when the SEC met to vote in closed Commission meetings in 2008, more than three times the rate in 2005 when Cox was appointed Chairman (but equal to the rate from 2003 and 2004).
As for the future of Enforcement, Chairman Schapiro reiterated her agenda for the Division of Enforcement in an address last week to the Society of American Business Editors and Writers. She noted that she has streamlined SEC enforcement procedures by no longer requiring full Commission approval to launch an investigation, and eliminating the need for approval by the full Commission before negotiating a settlement. She stated “before these directives, enforcement attorneys will tell you that they worried about red lights at every turn — now they see green.” This is sure to mean many more inquiries and, in all likelihood, much speedier cases as the Enforcement Division ramps up again.
...
- Dave Lynn
Thursday, April 30, 2009
NVCA 4-Pillar Plan to Restore Liquidity in the U.S. Venture Capital Industry
Check out this SlideShare Presentation:
Wednesday, April 29, 2009
Another View: A Bailout for the Plaintiff’s Bar
DealBook, NYT, April 29, 2009
In January 2008, I saw a rock musical in Los Angeles called “Blood, Bloody Andrew Jackson.” The refrain from the main number was “pop-u-li-sm: yeah, yeah!” By early 2009, thanks in no small part to the likes of the Troubled Asset Relief Fund, John A. Thain of Merrill Lynch and the American International Group’s bonus babies, that chorus spread east, enveloped the country and galvanized The People.
Such atrocities as banker bonuses and Mr. Thain’s bathroom redecoration have made delicious targets of contempt. It was the liberal media’s dream: a chance to position the lowly taxpayer, the outraged face of TARP, against the mustache-twirling titans of Wall Street.
Taxpayer vs. corporate bad guy is a good one. But how about taxpayer vs. shareholder?
That, surprisingly, is a story that’s largely evaded the news pages, despite the fact that settlements resulting from the scores of shareholder suits against TARP entities will stretch into the stratosphere.
Sure, through TARP, taxpayer money may be used to pay off mortgages and fund bonus pools. But, in what will amount to a far more expensive proposition, TARP money will also be used to line the pockets of allegedly aggrieved shareholders and the lawyers who, wrapped smugly in the flag of corporate governance, are in the process of making a billion-dollar cottage industry out of filing strike suits.
Take the villainous Merrill Lynch. On Jan. 16, the government announced it would invest $20 billion of TARP money in Bank of America and guarantee $118 billion of assets in order to help it absorb its acquisition of Merrill. On that same day, Merrill announced it would shell out $550 million to settle claims by shareholders that it misled investors about assets backed by subprime mortgages.
Where is that settlement money going to come from? At the minimum, settlements like this one mean Bank of America is less able to pay back TARP money. At the worst, the bank must cut into its TARP allotment in order to settle up. In either case, shareholders of companies that would have gone bankrupt but for TARP are instead getting their settlements funded by bailout money.
And there will be more. Thirty-two TARP recipients had received $1 billion or more in federal money as of April 15, according to the Treasury’s Web site. And 19 of those companies have been sued since January 2008, according to data accumulated by the Stanford Securities Class Action Clearinghouse. Put otherwise, of the more than $300 billion that’s been paid out in TARP money, nearly $240 billion of it, or 78 percent, is subject to shareholder suits.
Even in flush times, the shareholder class action is a controversial legal mechanism. Its backers claim that these suits keep companies honest by deterring corporate malfeasance and making the bad guys pay. (Yes, believe it or not, some will argue that even with the Department of Justice, the Securities and Exchange Commission and Attorney General Andrew M. Cuomo of New York patrolling Wall Street, we still need shareholder suits to keep companies honest.) But even in a typical, TARP-free paradigm, the bad guys don’t pay. Instead, shareholders wind up paying each other.
The shareholder class action is a “circular and costly” process, according to Adam Pritchard, a professor at the University of Michigan Law School. He explains: “It’s the company’s dollar that gets paid out in these suits. Shareholders effectively take a dollar from one pocket, pay about half of that dollar to lawyers on both sides, and then put the leftover change in their other pocket.”
But now, in the world according to TARP, that settlement money is no longer coming from the corporation or its insurance plan. It’s coming from you.
“At the end of day, you can’t avoid the fact that, in settling these cases, you will inevitably be taxing the taxpayer, as you shift tax money to the plaintiff-shareholder class,” says Joseph Grundfest, a professor at Stanford Law School and a former S.E.C. commissioner.
Ironically, by appearing to provide shareholders with a real remedy, class actions have long been billed as corporate law’s most populist event. But when taxpayer money, rather than the corporate coffer, is being used to fund the resulting settlements, whose bad behavior are we really punishing?
Dan Slater, a former litigator, is a freelance journalist in New York.
In January 2008, I saw a rock musical in Los Angeles called “Blood, Bloody Andrew Jackson.” The refrain from the main number was “pop-u-li-sm: yeah, yeah!” By early 2009, thanks in no small part to the likes of the Troubled Asset Relief Fund, John A. Thain of Merrill Lynch and the American International Group’s bonus babies, that chorus spread east, enveloped the country and galvanized The People.
Such atrocities as banker bonuses and Mr. Thain’s bathroom redecoration have made delicious targets of contempt. It was the liberal media’s dream: a chance to position the lowly taxpayer, the outraged face of TARP, against the mustache-twirling titans of Wall Street.
Taxpayer vs. corporate bad guy is a good one. But how about taxpayer vs. shareholder?
That, surprisingly, is a story that’s largely evaded the news pages, despite the fact that settlements resulting from the scores of shareholder suits against TARP entities will stretch into the stratosphere.
Sure, through TARP, taxpayer money may be used to pay off mortgages and fund bonus pools. But, in what will amount to a far more expensive proposition, TARP money will also be used to line the pockets of allegedly aggrieved shareholders and the lawyers who, wrapped smugly in the flag of corporate governance, are in the process of making a billion-dollar cottage industry out of filing strike suits.
Take the villainous Merrill Lynch. On Jan. 16, the government announced it would invest $20 billion of TARP money in Bank of America and guarantee $118 billion of assets in order to help it absorb its acquisition of Merrill. On that same day, Merrill announced it would shell out $550 million to settle claims by shareholders that it misled investors about assets backed by subprime mortgages.
Where is that settlement money going to come from? At the minimum, settlements like this one mean Bank of America is less able to pay back TARP money. At the worst, the bank must cut into its TARP allotment in order to settle up. In either case, shareholders of companies that would have gone bankrupt but for TARP are instead getting their settlements funded by bailout money.
And there will be more. Thirty-two TARP recipients had received $1 billion or more in federal money as of April 15, according to the Treasury’s Web site. And 19 of those companies have been sued since January 2008, according to data accumulated by the Stanford Securities Class Action Clearinghouse. Put otherwise, of the more than $300 billion that’s been paid out in TARP money, nearly $240 billion of it, or 78 percent, is subject to shareholder suits.
Even in flush times, the shareholder class action is a controversial legal mechanism. Its backers claim that these suits keep companies honest by deterring corporate malfeasance and making the bad guys pay. (Yes, believe it or not, some will argue that even with the Department of Justice, the Securities and Exchange Commission and Attorney General Andrew M. Cuomo of New York patrolling Wall Street, we still need shareholder suits to keep companies honest.) But even in a typical, TARP-free paradigm, the bad guys don’t pay. Instead, shareholders wind up paying each other.
The shareholder class action is a “circular and costly” process, according to Adam Pritchard, a professor at the University of Michigan Law School. He explains: “It’s the company’s dollar that gets paid out in these suits. Shareholders effectively take a dollar from one pocket, pay about half of that dollar to lawyers on both sides, and then put the leftover change in their other pocket.”
But now, in the world according to TARP, that settlement money is no longer coming from the corporation or its insurance plan. It’s coming from you.
“At the end of day, you can’t avoid the fact that, in settling these cases, you will inevitably be taxing the taxpayer, as you shift tax money to the plaintiff-shareholder class,” says Joseph Grundfest, a professor at Stanford Law School and a former S.E.C. commissioner.
Ironically, by appearing to provide shareholders with a real remedy, class actions have long been billed as corporate law’s most populist event. But when taxpayer money, rather than the corporate coffer, is being used to fund the resulting settlements, whose bad behavior are we really punishing?
Dan Slater, a former litigator, is a freelance journalist in New York.
Tuesday, April 14, 2009
Report Sees Signs Bankruptcy-Related M&A Deals on the Rise
Brian Baxter, 04-14-2009
Citing data compiled by Thomson Reuters, the Financial Times reports that bankruptcy-related M&A deals have hit their highest level globally since August 2004. With the economic downturn forcing more companies into sales of distressed assets, it seems likely the trend will continue.
"We've only just begun," Skadden, Arps, Slate, Meagher & Flom restructuring Co-chair J. Gregory Milmoe told the Financial Times. "Given the dearth of capital and the substantial increase in the number of companies that will be troubled, one would expect the M&A rate to increase dramatically."
A few weeks ago we posted on the rise in section 363 asset sales and liquidations occurring in bankruptcy, citing pending sales by BearingPoint and The Greenbrier Hotel.
"[Section 363s] are a capital markets-driven phenomenon; there's less DIP financing to stay in the ordinary course of operations and support a standalone [bankruptcy] plan," Willkie Farr & Gallagher business reorganization Chair Marc Abrams told us. "And there are equally reduced levels of exit financing that would permit a company, once it comes up with a stand-alone plan, to emerge from bankruptcy."
The Financial Times points to the $350 million BearingPoint deal and the decision by auto parts manufacturer Delphi to sell its brakes business to a Chinese company for $100 million as evidence that bankruptcy-related M&A is on the rise.
Thomson Reuters identified 34 such deals in March alone and 67 so far this year. The bulk of those deals were in the U.S. and Japan, the Financial Times reports, because of the length of time both countries have been in recession and more liberal bankruptcy rules that allow companies to operate while they restructure.
According to Thomson Reuters data, monthly totals for bankruptcy-related M&A peaked at 87 such deals in July 2002 and dwindled to a mere seven in May 2007, shortly before the onset of the global recession.
While many of the deals of the last downturn involved telecoms and tech startups being acquired by strategic and private equity buyers, this time around, the private equity money has remained on the sidelines because debt has become more expensive.
Since insolvencies tend to peak 12 to 18 months after the beginning of a recession, Thomson Reuters data suggest that more bankruptcy-related M&A work will emerge later this year, the Financial Times reports.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.
Copyright 2009. Incisive Media US Properties, LLC. All rights reserved.
Citing data compiled by Thomson Reuters, the Financial Times reports that bankruptcy-related M&A deals have hit their highest level globally since August 2004. With the economic downturn forcing more companies into sales of distressed assets, it seems likely the trend will continue.
"We've only just begun," Skadden, Arps, Slate, Meagher & Flom restructuring Co-chair J. Gregory Milmoe told the Financial Times. "Given the dearth of capital and the substantial increase in the number of companies that will be troubled, one would expect the M&A rate to increase dramatically."
A few weeks ago we posted on the rise in section 363 asset sales and liquidations occurring in bankruptcy, citing pending sales by BearingPoint and The Greenbrier Hotel.
"[Section 363s] are a capital markets-driven phenomenon; there's less DIP financing to stay in the ordinary course of operations and support a standalone [bankruptcy] plan," Willkie Farr & Gallagher business reorganization Chair Marc Abrams told us. "And there are equally reduced levels of exit financing that would permit a company, once it comes up with a stand-alone plan, to emerge from bankruptcy."
The Financial Times points to the $350 million BearingPoint deal and the decision by auto parts manufacturer Delphi to sell its brakes business to a Chinese company for $100 million as evidence that bankruptcy-related M&A is on the rise.
Thomson Reuters identified 34 such deals in March alone and 67 so far this year. The bulk of those deals were in the U.S. and Japan, the Financial Times reports, because of the length of time both countries have been in recession and more liberal bankruptcy rules that allow companies to operate while they restructure.
According to Thomson Reuters data, monthly totals for bankruptcy-related M&A peaked at 87 such deals in July 2002 and dwindled to a mere seven in May 2007, shortly before the onset of the global recession.
While many of the deals of the last downturn involved telecoms and tech startups being acquired by strategic and private equity buyers, this time around, the private equity money has remained on the sidelines because debt has become more expensive.
Since insolvencies tend to peak 12 to 18 months after the beginning of a recession, Thomson Reuters data suggest that more bankruptcy-related M&A work will emerge later this year, the Financial Times reports.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.
Copyright 2009. Incisive Media US Properties, LLC. All rights reserved.
Friday, April 10, 2009
Q1 Worldwide M&A League Table
Here's Thomson Reuters' Q1 Worldwide M&A league table.
Announced deals 01/01/09 - 31/03/2009
1. Morgan Stanley - $218.6bn deal volume, 70 deals
2. JPMorgan - $203.3bn, 70
3. Citi - $182.7bn, 59
4. Goldman Sachs - $160.2bn, 37
5. Deutsche Bank - $133.4bn, 50
6. Credit Suisse - $116.2bn, 50
7. Bank of America / Merrill Lynch - $99.2bn, 42
8. UBS - $93.1bn, 42
9. Barclays Capital - $69.7bn, 11
10. Evercore Partners - $67.3bn, 6
11. Lazard - $41.6bn, 39
12. Rothschild - $35.4bn, 52
13. Nomura - $31.9bn, 58
14. Santander - $28.3bn, 16
15. RBC Capital Markets - $26.1bn, 23
16. Mediobanca - $21.5bn, 10
17. China Int Capital Co - $20.1bn, 11
18. Blackstone Group - $19.3bn, 11
19. CIBC World Markets - $19.0bn, 8
20. BNP Paribas - $12.1bn, 17
21. ING - $11.9bn, 9
22. RBS - $11.1bn, 13
23. NIBC NV - $10.8bn, 2
24. Scotia Bank / Bank of Nova Scotia - $7.9bn, 9
25. Grant Samuel - $7.6bn, 7
Source - Thomson Reuters
Announced deals 01/01/09 - 31/03/2009
1. Morgan Stanley - $218.6bn deal volume, 70 deals
2. JPMorgan - $203.3bn, 70
3. Citi - $182.7bn, 59
4. Goldman Sachs - $160.2bn, 37
5. Deutsche Bank - $133.4bn, 50
6. Credit Suisse - $116.2bn, 50
7. Bank of America / Merrill Lynch - $99.2bn, 42
8. UBS - $93.1bn, 42
9. Barclays Capital - $69.7bn, 11
10. Evercore Partners - $67.3bn, 6
11. Lazard - $41.6bn, 39
12. Rothschild - $35.4bn, 52
13. Nomura - $31.9bn, 58
14. Santander - $28.3bn, 16
15. RBC Capital Markets - $26.1bn, 23
16. Mediobanca - $21.5bn, 10
17. China Int Capital Co - $20.1bn, 11
18. Blackstone Group - $19.3bn, 11
19. CIBC World Markets - $19.0bn, 8
20. BNP Paribas - $12.1bn, 17
21. ING - $11.9bn, 9
22. RBS - $11.1bn, 13
23. NIBC NV - $10.8bn, 2
24. Scotia Bank / Bank of Nova Scotia - $7.9bn, 9
25. Grant Samuel - $7.6bn, 7
Source - Thomson Reuters
Thursday, April 09, 2009
Nail the Shorts?
Floyd Norris, NYT, Notions on High and Low Finance, April 8, 2009:
The S.E.C. is putting out for comment a bunch of possible short-selling restrictions today. There are several variations on two ideas. First is an uptick rule, like one we used to have, that bars short-selling at a price lower than the last different price. Second is some type of circuit breaker, like barring further short sales of a particular stock on a day that stock has fallen 10 percent.
I assume the commission will eventually adopt something. The pressure from Congress, and the public, is great.
And I suspect that the eventual impact of what they adopt will be modest, at best.
Listening to the five commissioners speak was refreshing, in contrast to the unlamented S.E.C. during the chairmanship of Christopher Cox. Last fall, the S.E.C. introduced panic measure after panic measure to halt or reduce short-selling. There was little effort to carefully consider whether there was any evidence to support the measures, which seemed to change every hour or two. Then they had to be tweaked as unanticipated consequences piled up.
This time, all five commissioners, led by Chairwoman Mary Schapiro, seemed to understand that there is no empirical evidence to support the belief that short-sellers are to blame for much of anything, even if there is public outrage. Whatever rule is adopted will be chosen after everyone has a chance to comment and point out unintended consequences.
It sounds as if panic is receding at the commission.
The S.E.C. is putting out for comment a bunch of possible short-selling restrictions today. There are several variations on two ideas. First is an uptick rule, like one we used to have, that bars short-selling at a price lower than the last different price. Second is some type of circuit breaker, like barring further short sales of a particular stock on a day that stock has fallen 10 percent.
I assume the commission will eventually adopt something. The pressure from Congress, and the public, is great.
And I suspect that the eventual impact of what they adopt will be modest, at best.
Listening to the five commissioners speak was refreshing, in contrast to the unlamented S.E.C. during the chairmanship of Christopher Cox. Last fall, the S.E.C. introduced panic measure after panic measure to halt or reduce short-selling. There was little effort to carefully consider whether there was any evidence to support the measures, which seemed to change every hour or two. Then they had to be tweaked as unanticipated consequences piled up.
This time, all five commissioners, led by Chairwoman Mary Schapiro, seemed to understand that there is no empirical evidence to support the belief that short-sellers are to blame for much of anything, even if there is public outrage. Whatever rule is adopted will be chosen after everyone has a chance to comment and point out unintended consequences.
It sounds as if panic is receding at the commission.
Wednesday, April 01, 2009
Will the stimulus package stimulate M&A?
Posted on April 1, 2009 at 1:26 PM, TheDeal.com:
M&A advisers don't see such a rosy future for their business, at least not in the near term, according to an annual survey by communications firm Brunswick Group LLC. Only 29% of the 59 respondents -- including bankers, lawyers and other market players -- maintain there will be signs of recovery in "a year to eighteen months" -- down from 52% who shared that view in April 2008. Indeed, 69% believe it will take up to five years to return to the level of M&A activity seen in 2007, up 28% from last year's survey. Respondents cited the lack of credit (39%), slowing economy (26%), lack of CEO confidence (26%) and equity market decline (9%) as the most significant factors stifling M&A. Asked about the likely impact of the stimulus package on dealmaking, 44% believe the package will have a positive affect on M&A if it is able to "restore confidence" and "ease credit" while 46% believe the package will have a neutral effect. "While advisers caution that recovery will take time, the survey indicates some areas where we can expect activity in 2009," Brunswick senior partner Steven Lipin said in a statement. "Lower company valuations as well as the potential impact of the stimulus package on both credit and confidence could drive domestic deals, especially in the healthcare and financial sectors, and prompt unsolicited transactions."Topping the list of sectors considered ripe for consolidation are healthcare (25%), financial services (24%), energy (15%) and consumer goods/retail (14%). - Claire Poole
M&A advisers don't see such a rosy future for their business, at least not in the near term, according to an annual survey by communications firm Brunswick Group LLC. Only 29% of the 59 respondents -- including bankers, lawyers and other market players -- maintain there will be signs of recovery in "a year to eighteen months" -- down from 52% who shared that view in April 2008. Indeed, 69% believe it will take up to five years to return to the level of M&A activity seen in 2007, up 28% from last year's survey. Respondents cited the lack of credit (39%), slowing economy (26%), lack of CEO confidence (26%) and equity market decline (9%) as the most significant factors stifling M&A. Asked about the likely impact of the stimulus package on dealmaking, 44% believe the package will have a positive affect on M&A if it is able to "restore confidence" and "ease credit" while 46% believe the package will have a neutral effect. "While advisers caution that recovery will take time, the survey indicates some areas where we can expect activity in 2009," Brunswick senior partner Steven Lipin said in a statement. "Lower company valuations as well as the potential impact of the stimulus package on both credit and confidence could drive domestic deals, especially in the healthcare and financial sectors, and prompt unsolicited transactions."Topping the list of sectors considered ripe for consolidation are healthcare (25%), financial services (24%), energy (15%) and consumer goods/retail (14%). - Claire Poole
Angel Investors’ Wings Are Being Clipped
From Claire Cain Miller at Bits:
Entrepreneurs had a harder time getting angel funding to get their start-up idea off the ground last year, according to a new report from the Center for Venture Research at the University of New Hampshire. In 2008, angel investors funded young companies at the same pace as they did the year before, but they invested significantly less in each start-up.
Angels invested $19.2 billion in start-ups in 2008, a decrease of 26 percent from $26 billion in 2007. Still, they financed 55,480 ideas, only a slight decrease of 3 percent from 57,120 the year before. As a result, the average deal size for 2008 fell 24 percent from 2007. MORE »
Entrepreneurs had a harder time getting angel funding to get their start-up idea off the ground last year, according to a new report from the Center for Venture Research at the University of New Hampshire. In 2008, angel investors funded young companies at the same pace as they did the year before, but they invested significantly less in each start-up.
Angels invested $19.2 billion in start-ups in 2008, a decrease of 26 percent from $26 billion in 2007. Still, they financed 55,480 ideas, only a slight decrease of 3 percent from 57,120 the year before. As a result, the average deal size for 2008 fell 24 percent from 2007. MORE »
Monday, March 16, 2009
Naked Short Selling
A Few (Negative) Words about Naked Short Selling
TheCorporateCounsel.Net blog, March 16, 2009, by Broc Romanek:
When the market surged 6% last Tuesday, it was allegedly due to the rumor that the SEC would bring back the "uptick" rule (on Friday, the SEC announced it will hold an April 8th Commission meeting to propose a new uptick rule). The use of short selling by hedgies to move markets for their own gain was discussed during the conversation between Jon Stewart and Jim Cramer on Thursday. Add us to the chorus that something has to be done about short-selling. And something different than the SEC's emergency short-selling restrictions implemented last Fall, which some argue had no impact.
We've always believed that naked short selling is a form of manipulation, particularly when it occurs near the market's opening and close (even if it's part of a hedging strategy, it's often still manipulative). There now have been a number of stories revealing what short sellers have been doing over the past few years and it's clear that this is destructive behavior.
It's time that the SEC and other regulators step up. Otherwise, this is one more aspect of "deregulation" that will continue to allow some to artificially manipulate stock prices - and feed the widespread belief that the markets aren't safe.
TheCorporateCounsel.Net blog, March 16, 2009, by Broc Romanek:
When the market surged 6% last Tuesday, it was allegedly due to the rumor that the SEC would bring back the "uptick" rule (on Friday, the SEC announced it will hold an April 8th Commission meeting to propose a new uptick rule). The use of short selling by hedgies to move markets for their own gain was discussed during the conversation between Jon Stewart and Jim Cramer on Thursday. Add us to the chorus that something has to be done about short-selling. And something different than the SEC's emergency short-selling restrictions implemented last Fall, which some argue had no impact.
We've always believed that naked short selling is a form of manipulation, particularly when it occurs near the market's opening and close (even if it's part of a hedging strategy, it's often still manipulative). There now have been a number of stories revealing what short sellers have been doing over the past few years and it's clear that this is destructive behavior.
It's time that the SEC and other regulators step up. Otherwise, this is one more aspect of "deregulation" that will continue to allow some to artificially manipulate stock prices - and feed the widespread belief that the markets aren't safe.
Friday, March 13, 2009
Mark-to-Market Accounting Now on the Regulatory Fast Track
From TheCorporateCounsel.net Blog, March 13, 2009:
Yesterday’s House hearing on mark-to-market issues seemed to light a fire under the SEC and FASB, prompting commitments from FASB Chairman Robert Herz and the SEC’s Acting Chief Accountant Jim Kroeker to provide guidance on fair value accounting within three weeks.
As Edith Orenstein notes in the FEI Financial Reporting Blog, the members of the Committee pressed for immediate action:
“Rep. Paul Kanjorski (D-PA), chair of the Capital Markets Subcommittee of the House Financial Services Committee, noted in his opening remarks, “Mark-to-market accounting did not create our economic crisis, and altering it will not end the crisis. But improving the application of a fundamentally sound principle that is having profound adverse implications in a time of global financial distress is imperative. Therefore, our hearing today is about getting Financial Accounting Standards Board and the Securities and Exchange Commission to do the jobs they are required to do.” He added, “Emergency situations require expeditious action, not academic treatises. They must act quickly.”
“There are three pieces of legislation presently pending in Congress,” noted Kanjorski, with respect to mark-to-market accounting or accounting standard-setting generally (e.g. HR 1349 co-sponsored by Rep. Ed Perlmutter (D-CO) and Rep. Frank Lucas (R-OK) which would create a Federal Accounting Oversight Board). Kanjorski added, “I guarantee you one of those pieces of legislation is going to become law before early April.
Rep. Gary Ackerman (D-NY) responded to FASB’s current timetable, ‘If you are going to act, you’ve got to do it real quick.’”
The FASB Chairman ultimately responded, “We could have the guidance in three weeks; whether it will fix things, I don’t know.”
Also on the fast track are efforts to reinstate the “uptick rule” applicable to short selling. As noted in this Business Week article, SEC Chairman Mary Schapiro indicated in her testimony before the House appropriations committee earlier this week that the SEC hopes to propose reinstatement of the uptick rule some time in April.
Yesterday’s House hearing on mark-to-market issues seemed to light a fire under the SEC and FASB, prompting commitments from FASB Chairman Robert Herz and the SEC’s Acting Chief Accountant Jim Kroeker to provide guidance on fair value accounting within three weeks.
As Edith Orenstein notes in the FEI Financial Reporting Blog, the members of the Committee pressed for immediate action:
“Rep. Paul Kanjorski (D-PA), chair of the Capital Markets Subcommittee of the House Financial Services Committee, noted in his opening remarks, “Mark-to-market accounting did not create our economic crisis, and altering it will not end the crisis. But improving the application of a fundamentally sound principle that is having profound adverse implications in a time of global financial distress is imperative. Therefore, our hearing today is about getting Financial Accounting Standards Board and the Securities and Exchange Commission to do the jobs they are required to do.” He added, “Emergency situations require expeditious action, not academic treatises. They must act quickly.”
“There are three pieces of legislation presently pending in Congress,” noted Kanjorski, with respect to mark-to-market accounting or accounting standard-setting generally (e.g. HR 1349 co-sponsored by Rep. Ed Perlmutter (D-CO) and Rep. Frank Lucas (R-OK) which would create a Federal Accounting Oversight Board). Kanjorski added, “I guarantee you one of those pieces of legislation is going to become law before early April.
Rep. Gary Ackerman (D-NY) responded to FASB’s current timetable, ‘If you are going to act, you’ve got to do it real quick.’”
The FASB Chairman ultimately responded, “We could have the guidance in three weeks; whether it will fix things, I don’t know.”
Also on the fast track are efforts to reinstate the “uptick rule” applicable to short selling. As noted in this Business Week article, SEC Chairman Mary Schapiro indicated in her testimony before the House appropriations committee earlier this week that the SEC hopes to propose reinstatement of the uptick rule some time in April.
Monday, March 02, 2009
Buffett on Private Equity
Excerpt From Berkshire Hathaway’s 2008 Annual Report
Our long-avowed goal is to be the “buyer of choice” for businesses – particularly those built and owned by families. The way to achieve this goal is to deserve it. That means we must keep our promises; avoid leveraging up acquired businesses; grant unusual autonomy to our managers; and hold the purchased companies through thick and thin (though we prefer thick and thicker).
Our record matches our rhetoric.
Most buyers competing against us, however, follow a different path. For them, acquisitions are “merchandise.” Before the ink dries on their purchase contracts, these operators arecontemplating “exit strategies.” We have a decided advantage, therefore, when we encounter sellers who truly care about the future of their businesses.
Some years back our competitors were known as “leveraged-buyout operators.” But LBO became abad name. So in Orwellian fashion, the buyout firms decided to change their moniker. What they did not change, though, were the essential ingredients of their previous operations, including their cherished fee structures and love of leverage.
Their new label became “private equity,” a name that turns the facts upside-down: A purchase of a business by these firms almost invariably results in dramatic reductions in the equity portion of the acquiree’s capital structure compared to that previously existing. A number of these acquirees, purchased only two to three years ago, are now in mortal danger because of the debt piled on them by their private-equity buyers. Much of the bank debt is selling below 70¢ on the dollar, and the public debt has taken a far greater beating. The private equityfirms, it should be noted, are not rushing in to inject the equity their wards now desperately need.Instead, they’re keeping their remaining funds very private.
In the regulated utility field there are no large family-owned businesses. Here, Berkshire hopes to be the “buyer of choice” of regulators. It is they, rather than selling shareholders, who judge the fitness of purchasers when transactions are proposed.
There is no hiding your history when you stand before these regulators. They can – and do – call their counterparts in other states where you operate and ask how you have behaved in respect to all aspects of the business, including a willingness to commit adequate equity capital.
When MidAmerican proposed its purchase of PacifiCorp in 2005, regulators in the six new states wewould be serving immediately checked our record in Iowa. They also carefully evaluated our financing plans and capabilities. We passed this examination, just as we expect to pass future ones.
There are two reasons for our confidence. First, Dave Sokol and Greg Abel are going to run anybusinesses with which they are associated in a first-class manner. They don’t know of any other way to operate.
Beyond that is the fact that we hope to buy more regulated utilities in the future – and we know that our business behavior in jurisdictions where we are operating today will determine how we are welcomed by new jurisdictions tomorrow.
Our long-avowed goal is to be the “buyer of choice” for businesses – particularly those built and owned by families. The way to achieve this goal is to deserve it. That means we must keep our promises; avoid leveraging up acquired businesses; grant unusual autonomy to our managers; and hold the purchased companies through thick and thin (though we prefer thick and thicker).
Our record matches our rhetoric.
Most buyers competing against us, however, follow a different path. For them, acquisitions are “merchandise.” Before the ink dries on their purchase contracts, these operators arecontemplating “exit strategies.” We have a decided advantage, therefore, when we encounter sellers who truly care about the future of their businesses.
Some years back our competitors were known as “leveraged-buyout operators.” But LBO became abad name. So in Orwellian fashion, the buyout firms decided to change their moniker. What they did not change, though, were the essential ingredients of their previous operations, including their cherished fee structures and love of leverage.
Their new label became “private equity,” a name that turns the facts upside-down: A purchase of a business by these firms almost invariably results in dramatic reductions in the equity portion of the acquiree’s capital structure compared to that previously existing. A number of these acquirees, purchased only two to three years ago, are now in mortal danger because of the debt piled on them by their private-equity buyers. Much of the bank debt is selling below 70¢ on the dollar, and the public debt has taken a far greater beating. The private equityfirms, it should be noted, are not rushing in to inject the equity their wards now desperately need.Instead, they’re keeping their remaining funds very private.
In the regulated utility field there are no large family-owned businesses. Here, Berkshire hopes to be the “buyer of choice” of regulators. It is they, rather than selling shareholders, who judge the fitness of purchasers when transactions are proposed.
There is no hiding your history when you stand before these regulators. They can – and do – call their counterparts in other states where you operate and ask how you have behaved in respect to all aspects of the business, including a willingness to commit adequate equity capital.
When MidAmerican proposed its purchase of PacifiCorp in 2005, regulators in the six new states wewould be serving immediately checked our record in Iowa. They also carefully evaluated our financing plans and capabilities. We passed this examination, just as we expect to pass future ones.
There are two reasons for our confidence. First, Dave Sokol and Greg Abel are going to run anybusinesses with which they are associated in a first-class manner. They don’t know of any other way to operate.
Beyond that is the fact that we hope to buy more regulated utilities in the future – and we know that our business behavior in jurisdictions where we are operating today will determine how we are welcomed by new jurisdictions tomorrow.
VCs challenge Obama plan to up carried interest tax
By CAMILLE RICKETTS, VentureBeat
Earlier this week, president Obama announced his intention to raise taxes on carried interest for hedge funds and private equity firms as part of his bold new budget plan. Not surprisingly, members of the venture capital community have been quick to speak out against the change, arguing that it will discourage investors from taking risks on potentially important startups, and ultimately weaken the economy.
Obama’s proposal would hike the tax on carried interest (the percentage earned on investment profits used to pay general partners at firms) — from the current 15 percent capital gains rate to 39 percent, more than the regular income tax rate, starting in 2011. Mark Heesen, president of the National Venture Capital Association, estimates that about 500 venture capitalists received carried interest checks in the last year. This might not seem like a lot, but further substracting from this number could dissuade bright young business minds from choosing private equity as a career, he says.
Beyond brain drain, he suggests the shift in policy could fundamentally change the types of companies investors choose to back. “When you look at venture capital, we are investing for the very long term in technologies that may or may not play out — ironically, the very technology that the administration is saying we need more of than ever, lifescience and cleantech,” Heesen says. “But as a VC, if you are going to get ordinary income tax on your carry, there is much less incentive to wait around for seven, eight, nine years.” The capital gains rate essentially gave firms a buffer to weather failures while waiting for something like Google or Genentech to hit the bigtime.
This has been the general consensus among investors, who say the industry will probably place its bets on safer, less innovative concepts if the Obama plan is implemented — and the results will run counter to the administration’s other major goals, namely energy efficiency and cost-effective health care. Many are also concerned that VCs will be less inclined to invest as much time working alongside portfolio companies to help refine their business models and foster growth. As Heesen puts it, “We are involved in long-term job creation, and if that’s not worthy of capital gains taxes, I don’t know what is.”
In the administration’s view, taxing carried interest at a higher level could bring in up to $2.7 billion in 2011 and $4.3 billion in 2012. And those supporting the measure believe the current policy allows some wealthy firms to dodge paying their fare share, reports the Washington Post.
When asked what he would advise Obama to do — considering the loss of public faith in Wall Street and country’s dire financial situation — Heesen said the administration should motivate investors to hold onto portfolio companies for longer periods of time. “There are ways to raise revenues in this area,” he says. “If you increased a long-term capital gains period so that VCs would hold onto assets for two to three years, that would set policy in the right direction.”
Copyright 2009 VentureBeat. All Rights Reserved.
Earlier this week, president Obama announced his intention to raise taxes on carried interest for hedge funds and private equity firms as part of his bold new budget plan. Not surprisingly, members of the venture capital community have been quick to speak out against the change, arguing that it will discourage investors from taking risks on potentially important startups, and ultimately weaken the economy.
Obama’s proposal would hike the tax on carried interest (the percentage earned on investment profits used to pay general partners at firms) — from the current 15 percent capital gains rate to 39 percent, more than the regular income tax rate, starting in 2011. Mark Heesen, president of the National Venture Capital Association, estimates that about 500 venture capitalists received carried interest checks in the last year. This might not seem like a lot, but further substracting from this number could dissuade bright young business minds from choosing private equity as a career, he says.
Beyond brain drain, he suggests the shift in policy could fundamentally change the types of companies investors choose to back. “When you look at venture capital, we are investing for the very long term in technologies that may or may not play out — ironically, the very technology that the administration is saying we need more of than ever, lifescience and cleantech,” Heesen says. “But as a VC, if you are going to get ordinary income tax on your carry, there is much less incentive to wait around for seven, eight, nine years.” The capital gains rate essentially gave firms a buffer to weather failures while waiting for something like Google or Genentech to hit the bigtime.
This has been the general consensus among investors, who say the industry will probably place its bets on safer, less innovative concepts if the Obama plan is implemented — and the results will run counter to the administration’s other major goals, namely energy efficiency and cost-effective health care. Many are also concerned that VCs will be less inclined to invest as much time working alongside portfolio companies to help refine their business models and foster growth. As Heesen puts it, “We are involved in long-term job creation, and if that’s not worthy of capital gains taxes, I don’t know what is.”
In the administration’s view, taxing carried interest at a higher level could bring in up to $2.7 billion in 2011 and $4.3 billion in 2012. And those supporting the measure believe the current policy allows some wealthy firms to dodge paying their fare share, reports the Washington Post.
When asked what he would advise Obama to do — considering the loss of public faith in Wall Street and country’s dire financial situation — Heesen said the administration should motivate investors to hold onto portfolio companies for longer periods of time. “There are ways to raise revenues in this area,” he says. “If you increased a long-term capital gains period so that VCs would hold onto assets for two to three years, that would set policy in the right direction.”
Copyright 2009 VentureBeat. All Rights Reserved.
Thursday, February 26, 2009
Survey: VC, Startups Feel the Pain
A new survey that detailed trends in venture capital investments in the fourth quarter of 2008 has found that, like the rest of the economy, venture capital and startups are feeling more pain from the deepening global crisis.
BusinessWeek reported that the survey, conducted by California law firm Fenwick & West, analyzed the terms of venture deals for 128 companies headquartered in the San Francisco Bay Area and found that valuations are falling for startups while venture capitalists are driving harder bargains.
Of the 128 companies that received financing, 33 percent of them experienced “down rounds,” or an investment that placed a lower valuation on the company than it received in the previous round.
In addition, the percentage of down rounds rose every month at year’s end, hitting 45 percent in December.
Go to Article from Business Week »
BusinessWeek reported that the survey, conducted by California law firm Fenwick & West, analyzed the terms of venture deals for 128 companies headquartered in the San Francisco Bay Area and found that valuations are falling for startups while venture capitalists are driving harder bargains.
Of the 128 companies that received financing, 33 percent of them experienced “down rounds,” or an investment that placed a lower valuation on the company than it received in the previous round.
In addition, the percentage of down rounds rose every month at year’s end, hitting 45 percent in December.
Go to Article from Business Week »
Tuesday, February 17, 2009
The American Recovery and Reinvestment Act
From the CorporateCounsel.Net Blog, February 17, 2009:
Late Friday, Congress finished its conferencing and passed the "American Recovery and Reinvestment Act" - and law firms went to work drafting their memos analyzing this stimulus package (we'll be posting all these memos in our "American Recovery Act" Practice Area). The final text of the legislation is posted on the White House's site in five parts, along with the ability for anybody to post comments!
The most relevant part of the legislation for our members is the tax provisions in Division B, which includes the controversial executive compensation restrictions among others (eg. see this Hodak Value commentary) - even President Obama is not happy with what Senator Dodd inserted as the final exec comp language. Oddly, the stimulus legislation went from no new executive compensation restrictions on Friday morning to more restrictive than previously contemplated by the end of the day. More coverage to come...
Late Friday, Congress finished its conferencing and passed the "American Recovery and Reinvestment Act" - and law firms went to work drafting their memos analyzing this stimulus package (we'll be posting all these memos in our "American Recovery Act" Practice Area). The final text of the legislation is posted on the White House's site in five parts, along with the ability for anybody to post comments!
The most relevant part of the legislation for our members is the tax provisions in Division B, which includes the controversial executive compensation restrictions among others (eg. see this Hodak Value commentary) - even President Obama is not happy with what Senator Dodd inserted as the final exec comp language. Oddly, the stimulus legislation went from no new executive compensation restrictions on Friday morning to more restrictive than previously contemplated by the end of the day. More coverage to come...
Monday, February 16, 2009
Congress strengthens executives’ pay limits
CHICAGO — President Barack Obama’s economic team tried to keep Democratic allies negotiating the stimulus bill from limiting paychecks for executives at banks in need of a bailout. Treasury Secretary Timothy Geithner and economic aide Lawrence Summers failed.
Sen. Christopher Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee, inserted strict rules into the $787 billion economic stimulus package over the White House’s objections. Dodd’s limits on bankers’ bonuses are significantly more aggressive than those sought by Obama or Geithner in recent days, with much fanfare.
Dodd, D-Conn., said the restrictions — an executive making $1 million a year in salary could receive only $500,000 in bonus money, for example — are necessary if Obama plans to ask Congress for more money to save the financial sector.
“It will never happen as long as the public perceives that there are people getting rich,” Dodd said in an interview. “Save their pay or save capitalism.”
That tone among Democrats flavored much of the discussion about how to write the stimulus bill, which the president planned to sign on Tuesday in Denver. Despite direct appeals from Geithner, Summers and White House officials, Democrats didn’t budge, according to administration officials.
The Obama administration’s proposed restrictions applied only to banks that receive “exceptional assistance” from the government. It set a $500,000 cap on pay for top executives and limited bonuses or additional compensation to restricted stock that could only be claimed after the firm had paid the government back.
The stimulus bill, however, sets executive bonus limits on all banks that receive infusions from the government’s $700 billion financial rescue fund. The number of executives affected depends on the amount of government assistance they receive. But as a rule, top executives will be prohibited from getting bonuses or incentives except as restricted stock that vests only after bailout funds are repaid and that is no greater than one-third of the executive’s annual compensation.
The prohibition would not apply to bonuses that are spelled out in an executive’s contract signed before Feb. 11, 2009.
At banks that received $25 million or less, the bonus restriction would apply only to the highest paid executives. At banks that receive $500 million or more, all senior executives and at least 20 of the next most highly compensated employees would fall under the bonus limits.
The White House claimed partial victory in this area. Officials also said that it would be up to Geithner to implement the bill and cautioned that the administration might be able to work out a deal with leaders on the Hill to modify some of the rules later.
The original bill said all banks receiving bailout money could give no bonuses to their top 25 employees. The White House worried that would dissuade smaller banks from taking — or keeping for long — the bailout money, which would slow their lending rates.
Administration officials also said they were worried Dodd’s plan would still allow multimillion dollar paychecks, just not structured as bonuses. The Obama plan would cap the entire compensation at $500,000 — with anything above that coming from restricted stock. Dodd’s plan provides no limit to base salary pay, which typically is relatively small but supplemented with gigantic bonuses.
Even so, the final bill was far stricter than the White House wanted.
“As he has already expressed, the president shares a deep concern about excessive executive compensation at financial firms that are receiving extraordinary assistance from American taxpayers,” spokeswoman Jen Psaki said Saturday.
White House officials took credit for influencing other parts of Congress’ plan, including shareholder say on pay and a requirement for companies to disclose luxury expenditures, administration officials said.
Negotiators had removed a $400,000 pay cap included in an earlier draft. The Congressional Budget Office said it would cost some $11 billion in lost tax revenues by 2019.
Associated Press writers Jim Kuhnhenn in Washington and Martin Crutsinger in Rome contributed to this report.
Sen. Christopher Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee, inserted strict rules into the $787 billion economic stimulus package over the White House’s objections. Dodd’s limits on bankers’ bonuses are significantly more aggressive than those sought by Obama or Geithner in recent days, with much fanfare.
Dodd, D-Conn., said the restrictions — an executive making $1 million a year in salary could receive only $500,000 in bonus money, for example — are necessary if Obama plans to ask Congress for more money to save the financial sector.
“It will never happen as long as the public perceives that there are people getting rich,” Dodd said in an interview. “Save their pay or save capitalism.”
That tone among Democrats flavored much of the discussion about how to write the stimulus bill, which the president planned to sign on Tuesday in Denver. Despite direct appeals from Geithner, Summers and White House officials, Democrats didn’t budge, according to administration officials.
The Obama administration’s proposed restrictions applied only to banks that receive “exceptional assistance” from the government. It set a $500,000 cap on pay for top executives and limited bonuses or additional compensation to restricted stock that could only be claimed after the firm had paid the government back.
The stimulus bill, however, sets executive bonus limits on all banks that receive infusions from the government’s $700 billion financial rescue fund. The number of executives affected depends on the amount of government assistance they receive. But as a rule, top executives will be prohibited from getting bonuses or incentives except as restricted stock that vests only after bailout funds are repaid and that is no greater than one-third of the executive’s annual compensation.
The prohibition would not apply to bonuses that are spelled out in an executive’s contract signed before Feb. 11, 2009.
At banks that received $25 million or less, the bonus restriction would apply only to the highest paid executives. At banks that receive $500 million or more, all senior executives and at least 20 of the next most highly compensated employees would fall under the bonus limits.
The White House claimed partial victory in this area. Officials also said that it would be up to Geithner to implement the bill and cautioned that the administration might be able to work out a deal with leaders on the Hill to modify some of the rules later.
The original bill said all banks receiving bailout money could give no bonuses to their top 25 employees. The White House worried that would dissuade smaller banks from taking — or keeping for long — the bailout money, which would slow their lending rates.
Administration officials also said they were worried Dodd’s plan would still allow multimillion dollar paychecks, just not structured as bonuses. The Obama plan would cap the entire compensation at $500,000 — with anything above that coming from restricted stock. Dodd’s plan provides no limit to base salary pay, which typically is relatively small but supplemented with gigantic bonuses.
Even so, the final bill was far stricter than the White House wanted.
“As he has already expressed, the president shares a deep concern about excessive executive compensation at financial firms that are receiving extraordinary assistance from American taxpayers,” spokeswoman Jen Psaki said Saturday.
White House officials took credit for influencing other parts of Congress’ plan, including shareholder say on pay and a requirement for companies to disclose luxury expenditures, administration officials said.
Negotiators had removed a $400,000 pay cap included in an earlier draft. The Congressional Budget Office said it would cost some $11 billion in lost tax revenues by 2019.
Associated Press writers Jim Kuhnhenn in Washington and Martin Crutsinger in Rome contributed to this report.
Wednesday, February 04, 2009
Pssst Wall Street: Change the Name from Bonuses to “Making Work Pay” Credits
From Truth on the Market, by Thom Lambert, February 2, 2009
President Obama, widely admired for his willingness and ability to engage in nuanced analysis, painted with pretty broad strokes when he attacked the bonuses recently paid by Wall Street banks:
"One point I want to make is that all of us are going to have responsibilities to get this economy moving again. And when I saw an article today indicating that Wall Street bankers had given themselves $20 billion worth of bonuses — the same amount of bonuses as they gave themselves in 2004 — at a time when most of these institutions were teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that if they don’t provide help that the entire system could come down on top of our heads — that is the height of irresponsibility. It is shameful."
Obama’s message has resonated with millions of Americans and no doubt scored him lots of “forthrightness” points. Indeed, two of my colleagues, both of whom I respect greatly, told me how refreshing it was to hear their leader speak in such black and white terms, calling this sort of behavior “shameful.”
With all due respect, I’m afraid I must dissent.
Putting aside that it’s generally unfair (un-nuanced?) to lump groups of disparate individuals together to make a political point, it’s important to note:
* that many of the institutions in this bonus pool didn’t receive TARP money;
* that a number of the banks (the biggies in particular) didn’t “ask[] for taxpayers to help sustain them,” as this article explains (and note Secretary Geithner’s presence at the meeting described);
* that the bonuses were generally for the rank and file salespeople, not for senior executives, and were based on their individual performances;
* that the bonus pool was down 44% from last year; and
* that “Wall Street” (a group of disparate stock brokers, commodities traders, investment bankers, and administrative professionals who don’t work in concert) really had no more to do with this crisis than did the real estate agents who sold (and earned commissions on) homes they knew to be overvalued and who are now benefiting from Treasury’s purchase of mortgage-related assets.
Most importantly, though, it’s important to recognize that these “shameful” bonuses are effectively the wages of the working folks who did a good job this past year. Imagine you’re a salesperson at a company. In order to create an incentive for you to bust your tail, the company negotiates with you a leveraged compensation plan under which you receive a relatively small base salary plus fairly generous commissions on the sales you close. Suppose you do a bang up job one year, but the company as a whole suffers a loss because of some poor decisions beyond your control (or because of developments in the macroeconomy, such as the bursting of an asset bubble facilitated by government-sponsored entities). Now imagine that the government perceives your company to be strategically important and therefore decides to subsidize it by, say, buying its preferred stock or extending it a loan. Would it be “the height of irresponsibility” for your employer to honor your legitimate compensation expectations and pay you the wages that you effectively earned under your implicit deal with the firm? And what would happen if your employer didn’t pay you what you legitimately expected? Wouldn’t you and the other successful salespeople at your company immediately bolt, leaving the company with a much less effective sales force?
Look, I agree that private firms that get in bed with the government open themselves up to all sorts of meddling in their affairs and that it’s appropriate for the government to exercise some measure of control over the firms it subsidizes. But our leaders need to be fair in recognizing that the bonuses in this industry are really legitimate wages; that the rank-and-file workers to whom they’re being paid are not responsible for the mess we’re in; that the bonus recipients are the ones who did a good job last year and who deserve to have their legitimate wage expectations honored; and that we U.S. citizens — as preferred stockholders in these financial institutions — have an interest in retaining the firms’ best workers and in maintaining the sort of leveraged, “eat what you kill” compensation scheme that has proven to best incentivize performance.
In the end, these so-called shameful bonuses are really just a matter of “making work pay” in these struggling financial firms. Who could rail against that?
President Obama, widely admired for his willingness and ability to engage in nuanced analysis, painted with pretty broad strokes when he attacked the bonuses recently paid by Wall Street banks:
"One point I want to make is that all of us are going to have responsibilities to get this economy moving again. And when I saw an article today indicating that Wall Street bankers had given themselves $20 billion worth of bonuses — the same amount of bonuses as they gave themselves in 2004 — at a time when most of these institutions were teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that if they don’t provide help that the entire system could come down on top of our heads — that is the height of irresponsibility. It is shameful."
Obama’s message has resonated with millions of Americans and no doubt scored him lots of “forthrightness” points. Indeed, two of my colleagues, both of whom I respect greatly, told me how refreshing it was to hear their leader speak in such black and white terms, calling this sort of behavior “shameful.”
With all due respect, I’m afraid I must dissent.
Putting aside that it’s generally unfair (un-nuanced?) to lump groups of disparate individuals together to make a political point, it’s important to note:
* that many of the institutions in this bonus pool didn’t receive TARP money;
* that a number of the banks (the biggies in particular) didn’t “ask[] for taxpayers to help sustain them,” as this article explains (and note Secretary Geithner’s presence at the meeting described);
* that the bonuses were generally for the rank and file salespeople, not for senior executives, and were based on their individual performances;
* that the bonus pool was down 44% from last year; and
* that “Wall Street” (a group of disparate stock brokers, commodities traders, investment bankers, and administrative professionals who don’t work in concert) really had no more to do with this crisis than did the real estate agents who sold (and earned commissions on) homes they knew to be overvalued and who are now benefiting from Treasury’s purchase of mortgage-related assets.
Most importantly, though, it’s important to recognize that these “shameful” bonuses are effectively the wages of the working folks who did a good job this past year. Imagine you’re a salesperson at a company. In order to create an incentive for you to bust your tail, the company negotiates with you a leveraged compensation plan under which you receive a relatively small base salary plus fairly generous commissions on the sales you close. Suppose you do a bang up job one year, but the company as a whole suffers a loss because of some poor decisions beyond your control (or because of developments in the macroeconomy, such as the bursting of an asset bubble facilitated by government-sponsored entities). Now imagine that the government perceives your company to be strategically important and therefore decides to subsidize it by, say, buying its preferred stock or extending it a loan. Would it be “the height of irresponsibility” for your employer to honor your legitimate compensation expectations and pay you the wages that you effectively earned under your implicit deal with the firm? And what would happen if your employer didn’t pay you what you legitimately expected? Wouldn’t you and the other successful salespeople at your company immediately bolt, leaving the company with a much less effective sales force?
Look, I agree that private firms that get in bed with the government open themselves up to all sorts of meddling in their affairs and that it’s appropriate for the government to exercise some measure of control over the firms it subsidizes. But our leaders need to be fair in recognizing that the bonuses in this industry are really legitimate wages; that the rank-and-file workers to whom they’re being paid are not responsible for the mess we’re in; that the bonus recipients are the ones who did a good job last year and who deserve to have their legitimate wage expectations honored; and that we U.S. citizens — as preferred stockholders in these financial institutions — have an interest in retaining the firms’ best workers and in maintaining the sort of leveraged, “eat what you kill” compensation scheme that has proven to best incentivize performance.
In the end, these so-called shameful bonuses are really just a matter of “making work pay” in these struggling financial firms. Who could rail against that?
Another View: Lessons From the Budweiser Battle
Sabine Chalmers, the chief legal officer of Anheuser-Busch InBev, and Frank Aquila, a partner in the mergers and acquisitions group of Sullivan & Crowmell, were InBev’s lead internal and external lawyers, respectively, on the company’s successful bid to acquire Anheuser-Busch last year. Below, Mr. Aquila and Ms. Chalmers offer their views on what other unsolicited buyers can learn from this takeover battle.
Hostile to Whom? Unsolicited Offers Become MainstreamLessons From InBev’s Acquisition of Anheuser-Busch
The tactics and objectives of unsolicited offers in the 1970s and 1980s justifiably evoked images of raiders and pirates. Yet while these terms continue to be used — hostile bidder, bear hugs, poison pills and white knights — today’s strategic buyers have little in common with the greenmailers and corporate bust-up artists of that era. Today, such buyers view unsolicited bids as just another tool in their chest to achieve strategic objectives.
InBev was not alone among multinational strategic buyers in making unsolicited bids in 2008. Microsoft, United Technologies, Samsung, BHP Billiton and Electronic Arts, a veritable “who’s who” of multinational companies, were just a few that did so in the last year. Other blue-chip companies, including G.E. and I.B.M., have also pursued unsolicited offers as part of their M.&A. repertoire.
In the months and years to come, there will likely be a steady stream of such proposals. The continuing trend towards global consolidation, the current level of economic uncertainty and the recent precipitous drop in share prices come at a time when seller price expectations remain high and unsolicited bids are becoming increasingly respectable.
When undertaking any significant acquisition, solicited or unsolicited, planning is essential, because once an announcement is made, the deal team is at full stretch. No detail is too small, and every contingency must be given a thorough, 360-degree review well before the news is made public. While each situation will have its own dynamics, the lessons from InBev’s successful bid for Anheuser-Busch can be broadly applied by others considering a similar approach.
Lesson One: Define Success. An unsolicited acquisition that prevails at any cost may earn advisers a fee, but is unlikely to achieve all of the buyer’s key objectives. While the ultimate purpose of any acquisition is for the bidder to acquire the target company, the bidder will always have more nuanced objectives. From the outset, the InBev team was clear that it wanted its bid executed in such a way that the acquisition of Anheuser-Busch would proceed as quickly as possible, with a minimum of hostility and with financial discipline. This meant that while we had to move quickly, we would not vilify the other side or simply prevail by paying more than fair value. With these considerations in mind, the deal team developed an in depth plan that would set out to achieve all of InBev’s objectives.
Lesson Two: Turn Weaknesses to Advantage. Given the then developing credit crisis, we recognized that A-B’s board would focus on our financing and would likely reject our offer if there was the slightest weakness in the financing package. The deal team therefore explored the best and firmest financing arrangements that could be made available for the bid. As a consequence, InBev put in place an exceptionally strong, United Kingdom-style “certain funds” package. This not only removed financing as an issue in our negotiations with A-B, it ultimately allowed InBev to close a $55 billion financing in the midst of the severest credit crunch in more than a century.
Lesson Three: Anticipate Challenges and Be Proactive. From the outset, we had a carefully developed communications strategy ready for most possible scenarios. For example, we were ready with messages geared to the key constituencies. An outreach strategy was in place to address, early in the process, critical concerns of the employees, the wholesalers and the communities in which A-B operated. Beyond this initial program, we attempted to anticipate potential challenges to the bid and developed complete responses — press releases with detailed Q&As — that were ready to go when needed. This allowed InBev to respond to any rumor or charge within hours. Issues that might have played out over several days and become major distractions, instead became nonevents within less than a single news cycle.
Lesson Four: Don’t Expect to Win Round One. Developing a plan is important, executing that plan is essential. When the A-B board rejected InBev’s initial proposal, our hope of a quick, friendly deal began to evaporate. Rather than spending days contemplating our next move, the next phase of the plan went into high gear within hours of the A-B board’s decision. That same day, InBev filed a motion for declaratory judgment in Delaware Chancery Court making clear the company’s intention to remove and replace the A-B board by written consent. Without a moment’s hesitation, we began assembling our slate of nominees and our preparations for the consent solicitation.
Lesson Five: Dare to Think Big. In putting together our proposed slate of nominees for the A-B board, we sought well-known names that would give the consent solicitation process instant credibility. Hank McKinnell, the retired chairman and chief executive officer of Pfizer, led our director slate of former chief executives and business luminaries. Mr. McKinnell is the chairman emeritus of the Business Roundtable, the “trade group” of America’s top C.E.O.’s, and a highly regarded business leader. A slate that also included Adolphus A. Busch IV, a leading member of the Busch family, and well-known former C.E.O.’s such as Mr. McKinnell, Ernie Mario, John Lilly, Bill Yost and Allen Loren clearly made a strong statement to the business world. It was unveiled on July 7; within hours, the A-B board met and discussions between InBev and Anheuser-Busch began the next day. The deal was approved by the two boards a few days later.
* * * *
A takeover battle that many predicted would never succeed, and most believed would play out over many months at a very minimum, was resolved with an agreed deal just 32 days after the initial proposal. Not only did InBev achieve its main objective of acquiring Anheuser-Busch, it did so in a quick and friendly way, and at a fair price.
While no two deals are ever the same, planning will always be crucial. Once the plan has been developed, it must be implemented with skill and discipline. InBev and its advisers anticipated a long and hard-fought battle, but by developing tactics that reflected InBev’s true objectives, we were able to achieve a quick resolution on a basis that was ultimately beneficial to all parties.
The views and opinions expressed in this article are the authors’ own and do not necessarily represent those of either Anheuser-Busch InBev NV/SA or Sullivan & Cromwell L.L.P.
Hostile to Whom? Unsolicited Offers Become MainstreamLessons From InBev’s Acquisition of Anheuser-Busch
The tactics and objectives of unsolicited offers in the 1970s and 1980s justifiably evoked images of raiders and pirates. Yet while these terms continue to be used — hostile bidder, bear hugs, poison pills and white knights — today’s strategic buyers have little in common with the greenmailers and corporate bust-up artists of that era. Today, such buyers view unsolicited bids as just another tool in their chest to achieve strategic objectives.
InBev was not alone among multinational strategic buyers in making unsolicited bids in 2008. Microsoft, United Technologies, Samsung, BHP Billiton and Electronic Arts, a veritable “who’s who” of multinational companies, were just a few that did so in the last year. Other blue-chip companies, including G.E. and I.B.M., have also pursued unsolicited offers as part of their M.&A. repertoire.
In the months and years to come, there will likely be a steady stream of such proposals. The continuing trend towards global consolidation, the current level of economic uncertainty and the recent precipitous drop in share prices come at a time when seller price expectations remain high and unsolicited bids are becoming increasingly respectable.
When undertaking any significant acquisition, solicited or unsolicited, planning is essential, because once an announcement is made, the deal team is at full stretch. No detail is too small, and every contingency must be given a thorough, 360-degree review well before the news is made public. While each situation will have its own dynamics, the lessons from InBev’s successful bid for Anheuser-Busch can be broadly applied by others considering a similar approach.
Lesson One: Define Success. An unsolicited acquisition that prevails at any cost may earn advisers a fee, but is unlikely to achieve all of the buyer’s key objectives. While the ultimate purpose of any acquisition is for the bidder to acquire the target company, the bidder will always have more nuanced objectives. From the outset, the InBev team was clear that it wanted its bid executed in such a way that the acquisition of Anheuser-Busch would proceed as quickly as possible, with a minimum of hostility and with financial discipline. This meant that while we had to move quickly, we would not vilify the other side or simply prevail by paying more than fair value. With these considerations in mind, the deal team developed an in depth plan that would set out to achieve all of InBev’s objectives.
Lesson Two: Turn Weaknesses to Advantage. Given the then developing credit crisis, we recognized that A-B’s board would focus on our financing and would likely reject our offer if there was the slightest weakness in the financing package. The deal team therefore explored the best and firmest financing arrangements that could be made available for the bid. As a consequence, InBev put in place an exceptionally strong, United Kingdom-style “certain funds” package. This not only removed financing as an issue in our negotiations with A-B, it ultimately allowed InBev to close a $55 billion financing in the midst of the severest credit crunch in more than a century.
Lesson Three: Anticipate Challenges and Be Proactive. From the outset, we had a carefully developed communications strategy ready for most possible scenarios. For example, we were ready with messages geared to the key constituencies. An outreach strategy was in place to address, early in the process, critical concerns of the employees, the wholesalers and the communities in which A-B operated. Beyond this initial program, we attempted to anticipate potential challenges to the bid and developed complete responses — press releases with detailed Q&As — that were ready to go when needed. This allowed InBev to respond to any rumor or charge within hours. Issues that might have played out over several days and become major distractions, instead became nonevents within less than a single news cycle.
Lesson Four: Don’t Expect to Win Round One. Developing a plan is important, executing that plan is essential. When the A-B board rejected InBev’s initial proposal, our hope of a quick, friendly deal began to evaporate. Rather than spending days contemplating our next move, the next phase of the plan went into high gear within hours of the A-B board’s decision. That same day, InBev filed a motion for declaratory judgment in Delaware Chancery Court making clear the company’s intention to remove and replace the A-B board by written consent. Without a moment’s hesitation, we began assembling our slate of nominees and our preparations for the consent solicitation.
Lesson Five: Dare to Think Big. In putting together our proposed slate of nominees for the A-B board, we sought well-known names that would give the consent solicitation process instant credibility. Hank McKinnell, the retired chairman and chief executive officer of Pfizer, led our director slate of former chief executives and business luminaries. Mr. McKinnell is the chairman emeritus of the Business Roundtable, the “trade group” of America’s top C.E.O.’s, and a highly regarded business leader. A slate that also included Adolphus A. Busch IV, a leading member of the Busch family, and well-known former C.E.O.’s such as Mr. McKinnell, Ernie Mario, John Lilly, Bill Yost and Allen Loren clearly made a strong statement to the business world. It was unveiled on July 7; within hours, the A-B board met and discussions between InBev and Anheuser-Busch began the next day. The deal was approved by the two boards a few days later.
* * * *
A takeover battle that many predicted would never succeed, and most believed would play out over many months at a very minimum, was resolved with an agreed deal just 32 days after the initial proposal. Not only did InBev achieve its main objective of acquiring Anheuser-Busch, it did so in a quick and friendly way, and at a fair price.
While no two deals are ever the same, planning will always be crucial. Once the plan has been developed, it must be implemented with skill and discipline. InBev and its advisers anticipated a long and hard-fought battle, but by developing tactics that reflected InBev’s true objectives, we were able to achieve a quick resolution on a basis that was ultimately beneficial to all parties.
The views and opinions expressed in this article are the authors’ own and do not necessarily represent those of either Anheuser-Busch InBev NV/SA or Sullivan & Cromwell L.L.P.
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