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In Mizuho | Greenhill’s Beyond The Obvious podcast channel, we uncover the value that others miss.
Our podcast is a source for the latest discussions on topics related to capital markets, dealmaking activity, business leadership and more.
Delve into insights from our investment & corporate banking thought leaders to hear their unique perspectives on current trends and market influences.
Learn how industry icons and influential figures began their journeys, overcame adversity and rose to success.
Discover insights that look deeper.
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- Welcome back to M&A Corner.
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I'm delighted to be joined
by Igor Kirman,
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a friend but also a very prominent
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corporate attorney with the firm Wachtell, Lipton.
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He's also an author and a professor of law as well.
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So he's a very busy man.
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But he took a little bit of time for us today
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so we could talk about the market environment
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and trends generally.
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Igor, pleased to have you here.
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Igor, pleased to have you here.
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- Well, thank you, Kevin.
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- So we've just gone through an election
cycle and there's going to be changes.
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And clearly the market had a reaction
that was positive on the news
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and in particular around M&A,
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people are talking about this
being an accelerant of activity
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as we move into 2025.
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But before we get into futurecasting,
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how has the environment been over the last
call it two or three years.
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It's obviously been a more challenged
environment, and I'm curious what you put
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your finger on in terms of the driver
of the deceleration of activity.
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Because I think it gives us perspective
in how it might rebound in the future.
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- Look, it's a good question.
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Looking —
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I am much better
looking backwards than forwards.
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I think if you go back three years
as you just did,
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you’re going back to 2021,
which was, unexpectedly,
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I would say for —
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I'm humble enough to say
unexpectedly, 2021 turned out to be,
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a record setting year
that in the middle of Covid
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that nobody saw coming,
that started at the end of 2020.
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Frankly, I don't think I've ever worked
as hard in my life as I worked in,
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in the year 2021 and the same,
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across my entire firm, across
the industry as a whole.
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- Almost amazingly,
because you were probably doing it from
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your home.
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- Yeah, at home.
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- Which you never would have thought
when you began your legal career
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you'd be able to actually function
outside of an office.
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- And the number —
I didn't know there were that
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many hours that you could work
and that many meals you could skip.
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So I think 2021 was just a bazooka of a year.
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And I think, by many accounts,
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this may fall more on your expertise than mine,
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I think in —
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When you saw on '22
and then again in '23,
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that to me the decelerant was really
what was going on in the economy.
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With the combination of inflation
followed by interest rate
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increases and the expectation
that there would be more and this fear of
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what kind of landing would
we have to to battle this inflationary,
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situation.
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And I think, things
fell back down in a very sharp way
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and in '22 and continued also in '23.
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I mean, there's been a bit of a rebound
and in '24 a modest rebound.
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But I will say, since you've already
raised futurecasting that
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the prediction business has been alive
and well every one of those years,
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always, by the way,
pointing in the same direction.
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- I will say, there was a bit of artificiality.
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It felt like around 2021.
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And a good example of
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that is the SPAC boom, which has
since come crashing down to earth.
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And certainly the interest rate
environment was, if you think about a
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long-term perspective,
fairly unsustainable and a bit,
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you know, outside the bounds of what
a normal rate environment would look like.
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I do think we're moving into a hopefully
a situation where we can moderate
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those interest rate levels.
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Some of that inflationary,
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impact starts to come away.
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When you think
about the regulatory environment —
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I mean, I certainly saw deals
that made their way to the boardroom
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at a conceptual stage
where even if people thought the analysis
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and believe the analysis
would allow a transaction to go through
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Washington successfully,
people were not interested in the fight,
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they weren't interested in the spotlight,
and they didn't want to take two years
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out of the corporate history
to try to get that transaction done.
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And so a lot of things never really
got off the ground because of that.
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I'm sure you saw something similar
from your side of the table.
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- Very much so. Yeah.
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You know, in terms of inhibitors for deal
activity in the last couple of years,
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I mean, there's no question
the regulatory environment played a role.
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It was not the only role,
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I do think, the general economic
issues including
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most notably the interest rate
environment was a big deal.
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You know, when you have private equity
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as big a player as it has become
with that much dry powder, that
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whatever makes it harder
for them to do deals
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will show up in the numbers.
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But in the boardroom,
because he talked about that, I mean,
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I saw several flavors
of what you're talking about.
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I'll give you one that,
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that kind of, sticks in my mind,
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which is a deal
that is likely to be tried,
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regardless of administration, right?
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So earlier this year, for example, you —
You're in the boardroom
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and you're seeing a company that wants
to make a bid for another company.
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But with one administration,
they have to go in and to get that deal
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done, they have to offer the following,
remedies, pretty aggressive.
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And with the other administration,
their bet is they don't.
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So they still want to do the deal.
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It's not a matter of doing the deal
or not doing the deal, but by waiting
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you have the option
value of maybe offering less
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or trying to see
whether you can offer less.
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And if the deal isn't urgent,
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right, that's the kind of deal
that waits, right?
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So that's one category.
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Then the other category is quite
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obviously, we have sectors and size deals
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and they have a lot of bullseyes on them
that, there really has been a deterrent
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when you look at what the FTC
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and the DOJ have been focused on
and how novel their theories have been.
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There's been very much a deterrent value
to certain kinds of deals.
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Not, obviously —
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Still a lot of deals
getting done and tried.
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But it's a very aggressive
regulatory environment
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that we've been dealing
with in recent years.
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- You know, it's interesting how industry
specific some of this actually plays out
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from a pragmatic perspective,
whether it's Big Tech
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or healthcare
being more in the spotlight,
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which I do think continues from a Biden
administration to a Trump administration.
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There will continue to be enforcement
and oversight.
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It is not as though, it will be
a completely no rules playing field.
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So it'll be interesting,
at least from my perspective,
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to see how that plays out
in certain of these sectors.
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- For sure.
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And if you look
at the recent appointments,
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because we've actually seen the
appointments in the FTC and DOJ,
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on this topic, almost the very first words
you see in the press release
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or in or in Trump's announcement
is something about Big Tech, right?
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Or in their acceptance,
something about Big Tech.
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Now it could be Big Tech, you know,
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creating kind of censorship of certain opinions.
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It could be that angle,
it could be how big it is.
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There's this expectation, just given Trump's
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political orientation
and kind of the mood, in general,
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certainly on the GOP side,
that there will continue to be populist
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type attacks on at least Big Tech
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and as he mentioned, healthcare as well, probably.
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Because they're politically,
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easy or desirable to do, right?
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So politics is going to enter this
just as it has in this administration.
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It will continue in some way.
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You recall some of the biggest
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antitrust proceedings
against our largest tech companies today
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that are outside of the M&A context, were
begun in the first Trump administration.
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They're continuing through the Biden
years, and they will most likely continue.
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So we'll see.
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You know, having said all that,
I think net-net,
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we do expect a more favorable
deal environment.
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Because the FTC chair and the assistant,
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DOJ, head for antitrust will
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more likely, sort of favor more traditional,
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definitions of antitrust harm,
namely consumer harm.
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If you look at what the what
this current administration,
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Kanter and Lina Khan have done, I mean, in part
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they have focused on all these other kinds
of theories of harm, right?
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Whether it's labor or vertical or,
you know, other kinds of issues.
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And they haven't won many cases,
but they've imported those ideas
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into their merger guidelines,
which have no legal significance.
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But they've created a lot of deterrent value
for certain kinds of deals.
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So I expect at least,
what you'll see from Slater's
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and, you know, she is a line attorney,
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she spent ten years at the FTC,
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and she's
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now going to be at the DOJ.
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And I think that she's, going
to run it very differently.
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I mean, she's a lawyer's lawyer.
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- So I think we're in a bit of a
wait-and-see mode
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with respect to some of these policies,
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particularly early on
in the administration,
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to see how far he's willing to take
some of the ideas that he's put forward
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and then what
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the impact might be for an overall
macroeconomic drop back to deal activity.
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- That's why I'm out of the predictions business.
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Because, when I went back and looked at,
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the December predictions
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for the years ahead, they always point
to just one side of the ledger, right?
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You know,
what are the tailwinds.
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In every year, I assure you pent up
demand, CEO confidence, consumer confidence,
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you know, like you name it
every year has a list of them.
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And if you're honest, every list
should have
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the debit side as well
or the or the headwinds.
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And I think this year, as you point out
there are headwinds as well.
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First of all,
this political uncertainty
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in the world, right?
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I don't know how many people, would have
expected that in a mere 11 days
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the Syrian regime that has been
in power for 50 years
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would fall. Collapse
with barely a fight.
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That's an example of something that's, you
know, could transform an entire region.
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And we don't know yet
fully the fallout from that.
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That's just one example.
00:09:07:18 - 00:09:09:20
So there are things we can see
and try to predict.
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There are things that we should expect,
will will come up that no
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president can control
because it's a bigger macro event that,
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despite any wishes on the part of
the current president or the future one,
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you know, they're just events
that happen in the world.
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So there are geopolitical risks.
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There are, as you mentioned,
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policy risks.
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We've heard a lot about tariffs.
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Certainly, that's a good election issue for him.
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We don't know what the Trump
administration will do.
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We think they'll be tougher.
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But how tough?
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You know, that's TBD.
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- It's always a great conversation with you,
and I'm glad we were able to share
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some of what we usually talk about
with a broader audience.
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- Well, it is an absolute pleasure as always, Kevin.