Tune in tomorrow for the webcast – “M&A Research: Nuts & Bolts” – to hear Cooley’s Mutya Harsch; Wachtell Lipton’s Susan Hesse; White & Case’s Dan Kessler; Foley & Lardner’s Ben Rikkers and Fredrikson & Byron’s Jamie Snelson explain how to quickly analyze potential deals and their related documents, which can be more of an art than a science. Here’s the agenda:
1. M&A Research Nuts & Bolts: Getting Started
– Deal sheet (summary of basic info: working group, deal parameters, timing goals, billing arrangements)
– Due diligence/research/memos
– Identifying precedent deals (similar structure/issues, reflecting client preferences)
– Drafting
– Execution – checklists
– Closing – post-closing matters
2. Having the Infrastructure
– Knowledge management
– Central location for knowledge sharing; using technology; improving efficiency
– M&A group infrastructure
3. What External Resources Exist
– Basic due diligence tools
– Deal points studies
– Deal databases
– Specific resources
4. Staying Up-to-Date
– Internal communications
– Conferences
– External sources
– Law firm memos
– Close coordination with other groups in the firm
Here’s a recent report from FactSet that shows the trend toward activism at large- and mega-cap companies. Here’s an excerpt from the report:
The number of activist campaigns launched against Mega cap (greater than $50 billion in market value) and Large cap (greater than $10 billion in market value) companies in 2015 made up 8% of the total number of activist campaigns tracked by FactSet SharkRepellent (30 out of 375). This represented an increase from 2014, when these companies constituted 6.4% of the total number of activist campaigns (22 out of 345). Campaigns against Mega cap and Large cap firms have been increasing since 2009, when there were only six campaigns of this type, consisting of only 2.6% of the total (six out of 230). So far in 2016, there have been 104 total activist campaigns announced and four have involved a Mega cap or Large cap target. This is right near the number of campaigns against Mega cap and Large cap firms at the same point in 2015 (seven) and 2014 (five).
Here’s the intro for this blog from “The Activist Investor”:
About once a month, a PM calls us about some company, wanting to talk about the prospects for an activist project. We review the financials and the filings. Often we suggest the shareholder just move on – the business isn’t worth trying to turn around, or the board and management are too entrenched. Sometimes we suggest a plan. Once in awhile we move ahead with it.
Occasionally, and more often after we suggest moving on, the PM wants to write a strongly-worded letter to the BoD chair and the CEO. Confidence about the investment thesis and frustration about the current results and share price yields a long, detailed, and lively manifesto, an “open letter” to the board, management, and other shareholders.
At a minimum, this is a waste of time, energy, and money. Worse, it betrays a certain naive ignorance about activist investing.
This blog by “The Activist Investor” entitled “What Activist Investors Should Know About the ValueAct HSR Lawsuit” is a good companion for these memos posted in our “Antitrust” Practice Area.
Here’s some of the findings from Herbert Smith Freehills’ new study on deal-making:
– 90% of US respondents are planning to make an acquisition over the next three years, and 71% say they are likely to make 2 or more.
– The majority of respondents (68%) say that it will likely be a major deal (with an increase of at least 5% in overall revenue).
– 98% of respondents say at least one acquisition will be a cross-border deal, and 50% say they are likely to conduct at least 2 or more cross-border deals.
– Increasing market share is the strategic driver for 20% of US dealmakers, the largest share.
– Globally, three-quarters of businesses indicate recent market volatility has either increased their appetite for M&A or had no impact on their plans for the next three years*
– Antitrust tops the list of challenges faced by companies doing deals with anxieties over data protection and cyber security on the rise
It is with great sadness that I say farewell to Phil Stamatakos. I knew Phil for over 30 years, since I was his pledge trainer at our fraternity at the U of Michigan. Phil was one of the kindest souls I have ever met. He was a rare breed in college – already mature & compassionate. I was so happy to find that we were in the same profession several years later. He was a kind & loving husband and father, just like you knew he would be when you met him as a teenager. We love you & miss you Phil!
Just loving the Cooley’s new “M&A Blog.” Here’s an excerpt from a Cooley blog about a comparison of the number of CFIUS filings between 2014 & 2013:
The new data released by CFIUS reveal that 2014 saw a dramatic jump in the number of cross-border M&A and other investment transactions reported to CFIUS as compared to 2013 (the Committee received 147 transaction Notices in 2014, up from 97 deals reported in 2013). For the third year in a row, Chinese acquirers were involved in more reported transactions than investors from any other country.
Here’s the latest set of league tables from MergerMarket that list the law firms that most often represent companies in deals, broken out on a global and regional basis…
Following up on my blog last week about the IRS and Treasury issuing new temporary regulations & final regulations that address inversion transactions and certain post-inversion transactions, here’s an excerpt from this Cleary Gottlieb memo (& see these other memos posted in our “Tax” Practice Area):
Recently released proposed regulations that would classify certain intragroup loans as equity for U.S. tax purposes could have very significant consequences for M&A transactions, private equity investments and restructurings. If adopted in their present form, the proposed regulations would eliminate strategies that have been widely used in cross-border transactions. However, the proposal could also have unpredictable consequences for the day-to-day funding practices of both U.S. and foreign-owned multinational groups. Moreover, the proposal would impose burdensome documentation and substantiation requirements on intragroup loans as a necessary condition to having the loans respected as debt for tax purposes (regardless of whether as a legal and economic matter the loans are debt).
