5 Key Takeaways from Transaction Advisors M&A Conference 2019 at Fordham Law School
Dealmakers spoke candidly about a range of M&A industry hot-topics
13 June 2019
After a successful event held at Wharton San Francisco in March, the recent Transaction Advisors M&A Conference at Fordham Law School in New York kicked off with an opening keynote session that looked at methods for reviewing financial performance and strategic operational value from past acquisitions to model optimal buy-side transactions and deal structures. From there, the conversations among panelists and attendees became even more fascinating and revealing.
We spoke with William Jefferson Black, managing director and publisher at Transaction Advisors, about five key takeaways from the event.
1. Tracking past deal performance to shape the M&A strategy
Lisa Marchese, head of corporate development at American Express and Michael Jones, executive vice president of corporate development and M&A at GE, discussed the value of portfolio reviews for improving the capital allocation process. The merits of one-year and three-year retrospective reviews were discussed with the clear takeaway that both financial diligence and non-financial metrics, such as R&D progress or corporate culture integration, were important for a proper review of the deal’s performance.
2. Improving board involvement and communication
In the discussion on optimizing lines of authority between the Board, special committees and corporate development, Joseph Tedeschi, general counsel at Citi Holdings and head of M&A legal at Citigroup, provided guidance on maintaining memos to record “every extant and lingering obligation” to ensure regulatory compliance, deal security and maintain documentary evidence for the board of directors.
3. Digital acquisitions present valuation and integration challenges
As the conference looked at the pursuit and integration of digital acquisitions, Arindam Guha, corporate development, M&A, investments and strategy at IBM, noted that it is important to primarily retain the standalone value of the company through a highly customized and carefully managed integration process.
4. Managing M&A security is now a major process issue
In a discussion lead by Matt Porzio (pictured above, left), senior vice president, market & customer engagement at Intralinks, the participants considered a range of challenges when deal negotiations or target data is disclosed to the media, investors, customers or employees. The conversation included a look at the use of intentional leaks to drive specific actions and apply pressure on a target company.
The discussion then shifted to the unique legal, cultural and strategic issues associated with M&A security. Richard Davies (pictured above, second from right), global chief compliance officer at Avon, recommended testing M&A security to make sure your controls are working before the company is in the middle of a deal.
The panel further discussed intentional leaks perpetuated in the M&A industry, typically including financial information regarding valuations, revenue and other deal information. Drawing on Intralinks’ annual M&A Leaks Report, Porzio was able to comment on the takeover premium being higher for deals that are leaked, although leaked deals then take longer to close.
5. Cleanrooms can be the key to avoiding antitrust and competition challenges
Discussing information exchanges between the parties during the due diligence process can face regulatory scrutiny, according to Stacy Frazier, executive counsel, competition law and policy at AT&T. Frazier further commented on the use of clean-team access to restrict which parties have access to sensitive information to avoid regulatory review. “This is a real issue where enforcement actions are taking place, including challenges to the merger, divestiture requirements and behavioral remedies lasting up to 20 years,” Frazier explained.
Scott Petepiece, global M&A practice group leader at Shearman & Sterling, talked about the pressure from corporate development to get all of the information into the data room quickly. The better approach is typically to start with less specific data and then open up access to customer-specific information and pricing in the data room as the deal gets closer to closing.
Just ten years ago clean teams were unusual. “In early 2010 the DOJ and FTC started to put more of a spotlight on HR information sharing in the data room, and in 2016 they issued guidance for HR professionals,” said Jessica Delbaum, Esq., partner in the antitrust practice group at Shearman & Sterling.
Michael Hartman, senior vice president and assistant general counsel for AT&T, cautioned that regulatory challenges become more difficult when regulators begin to question whether gun-jumping occurred based on information that was not managed properly in the data room before the transaction actually closed.
The SS&C Intralinks team will be at M&A Conference at the University of Chicago on September 25-26. If you’re attending, we invite you to stop by our booth and meet our team of experts.
Pictured above (L-R): Intralinks' Matt Porzio moderated "Dealing with Leaks and M&A Security" featuring panelists Nichelle Maynard-Elliott, executive director, mergers & acquisitions at Praxair; Richard Davies, global chief compliance officer at Avon; and Siran Tanielyan, vice president of corporate development at Viacom.