Dealmaking has slowed—except among dealmakers
IN THE MARKET for corporate counsel, building is more common than buying. Shelling out for a bullpen of bankers or lawyers is often more costly than poaching a rival’s star performers. So if mergers are, like second marriages, a triumph of hope over experience, then the advisers who put them together really should know better when it comes to their own family. Though their clients are announcing tie-ups at the slowest pace in a decade, in recent weeks the corporate consiglieri have struck a flurry of deals among themselves. Three big transactions illustrate how they may be fooling themselves.
On May 21st Allen & Overy, one of London’s elite “magic circle” of law firms, announced a tie-up with Shearman & Sterling, a prestigious Wall Street “white shoe” practice. The merger will create a transatlantic giant with annual revenues exceeding bn. Especially for the British partner, though, it may end in heartache. Shearman has struggled to keep up with competitors and has haemorrhaged partners in recent years; in March it abandoned a tie-up with Hogan Lovells, another big firm. As well as staving off the threats of dealmakers departing amid a period of thin corporate activity, the joint firm’s bosses must prove that the marriage is one of convenience rather than desperation.
The second deal looks no less fraught. On May 22nd Mizuho, a Japanese banking giant, said it was acquiring Greenhill for $550m. The sale concludes a stagnant decade at the boutique American investment bank, founded in 1996 by Robert Greenhill, a former Morgan Stanley banker. With its share price down by more than 90% from its peak in 2009, the house of Greenhill is in a shoddy shape. That does not necessarily make trying to repair it a good idea.
2023-06-01 07:58:51
Article from www.economist.com