00:00:01:09 - 00:00:02:14 - Welcome back to M&A Corner. 00:00:02:14 - 00:00:05:04 I'm delighted to be joined by Igor Kirman, 00:00:05:04 - 00:00:06:23 a friend but also a very prominent 00:00:06:23 - 00:00:09:02 corporate attorney with the firm Wachtell, Lipton. 00:00:09:15 - 00:00:13:07 He's also an author and a professor of law as well. 00:00:13:22 - 00:00:14:23 So he's a very busy man. 00:00:14:23 - 00:00:16:22 But he took a little bit of time for us today 00:00:16:22 - 00:00:18:20 so we could talk about the market environment 00:00:18:20 - 00:00:19:22 and trends generally. 00:00:20:01 - 00:00:20:11 Igor, pleased to have you here. 00:00:20:11 - 00:00:21:17 Igor, pleased to have you here. 00:00:21:17 - 00:00:22:16 - Well, thank you, Kevin. 00:00:22:16 - 00:00:25:16 - So we've just gone through an election cycle and there's going to be changes. 00:00:25:16 - 00:00:29:15 And clearly the market had a reaction that was positive on the news 00:00:30:02 - 00:00:31:22 and in particular around M&A, 00:00:31:22 - 00:00:35:19 people are talking about this being an accelerant of activity 00:00:35:19 - 00:00:37:13 as we move into 2025. 00:00:37:13 - 00:00:40:11 But before we get into futurecasting, 00:00:40:11 - 00:00:44:10 how has the environment been over the last call it two or three years. 00:00:44:10 - 00:00:48:06 It's obviously been a more challenged environment, and I'm curious what you put 00:00:48:06 - 00:00:52:03 your finger on in terms of the driver of the deceleration of activity. 00:00:52:08 - 00:00:56:17 Because I think it gives us perspective in how it might rebound in the future. 00:00:56:21 - 00:00:57:22 - Look, it's a good question. 00:00:57:22 - 00:00:58:11 Looking — 00:00:58:11 - 00:01:01:08 I am much better looking backwards than forwards. 00:01:02:22 - 00:01:05:02 I think if you go back three years as you just did, 00:01:05:02 - 00:01:09:01 you’re going back to 2021, which was, unexpectedly, 00:01:09:01 - 00:01:10:03 I would say for — 00:01:10:03 - 00:01:13:18 I'm humble enough to say unexpectedly, 2021 turned out to be, 00:01:14:21 - 00:01:17:21 a record setting year that in the middle of Covid 00:01:17:21 - 00:01:21:15 that nobody saw coming, that started at the end of 2020. 00:01:21:15 - 00:01:24:18 Frankly, I don't think I've ever worked as hard in my life as I worked in, 00:01:25:04 - 00:01:28:04 in the year 2021 and the same, 00:01:28:09 - 00:01:31:09 across my entire firm, across the industry as a whole. 00:01:31:09 - 00:01:34:12 - Almost amazingly, because you were probably doing it from 00:01:34:12 - 00:01:34:23 your home. 00:01:34:23 - 00:01:35:19 - Yeah, at home. 00:01:35:19 - 00:01:38:04 - Which you never would have thought when you began your legal career 00:01:38:04 - 00:01:40:08 you'd be able to actually function outside of an office. 00:01:40:08 - 00:01:41:04 - And the number — I didn't know there were that 00:01:41:04 - 00:01:44:12 many hours that you could work and that many meals you could skip. 00:01:44:12 - 00:01:47:20 So I think 2021 was just a bazooka of a year. 00:01:47:20 - 00:01:50:20 And I think, by many accounts, 00:01:51:08 - 00:01:54:03 this may fall more on your expertise than mine, 00:01:54:03 - 00:01:55:08 I think in — 00:01:55:08 - 00:01:58:15 When you saw on '22 and then again in '23, 00:01:58:15 - 00:02:02:04 that to me the decelerant was really what was going on in the economy. 00:02:02:16 - 00:02:05:21 With the combination of inflation followed by interest rate 00:02:06:10 - 00:02:09:18 increases and the expectation that there would be more and this fear of 00:02:10:02 - 00:02:14:00 what kind of landing would we have to to battle this inflationary, 00:02:15:03 - 00:02:16:00 situation. 00:02:16:00 - 00:02:19:23 And I think, things fell back down in a very sharp way 00:02:19:23 - 00:02:23:09 and in '22 and continued also in '23. 00:02:23:09 - 00:02:26:14 I mean, there's been a bit of a rebound and in '24 a modest rebound. 00:02:27:04 - 00:02:30:08 But I will say, since you've already raised futurecasting that 00:02:30:08 - 00:02:33:08 the prediction business has been alive and well every one of those years, 00:02:34:03 - 00:02:36:04 always, by the way, pointing in the same direction. 00:02:36:04 - 00:02:38:07 - I will say, there was a bit of artificiality. 00:02:38:07 - 00:02:40:05 It felt like around 2021. 00:02:40:06 - 00:02:41:08 And a good example of 00:02:41:08 - 00:02:45:21 that is the SPAC boom, which has since come crashing down to earth. 00:02:45:21 - 00:02:48:14 And certainly the interest rate environment was, if you think about a 00:02:48:14 - 00:02:52:00 long-term perspective, fairly unsustainable and a bit, 00:02:52:12 - 00:02:56:01 you know, outside the bounds of what a normal rate environment would look like. 00:02:56:10 - 00:03:00:06 I do think we're moving into a hopefully a situation where we can moderate 00:03:00:06 - 00:03:01:19 those interest rate levels. 00:03:01:19 - 00:03:03:07 Some of that inflationary, 00:03:04:07 - 00:03:06:22 impact starts to come away. 00:03:06:22 - 00:03:09:02 When you think about the regulatory environment — 00:03:09:02 - 00:03:13:00 I mean, I certainly saw deals that made their way to the boardroom 00:03:13:12 - 00:03:17:08 at a conceptual stage where even if people thought the analysis 00:03:17:08 - 00:03:21:01 and believe the analysis would allow a transaction to go through 00:03:21:01 - 00:03:24:21 Washington successfully, people were not interested in the fight, 00:03:25:07 - 00:03:28:15 they weren't interested in the spotlight, and they didn't want to take two years 00:03:28:15 - 00:03:31:15 out of the corporate history to try to get that transaction done. 00:03:31:18 - 00:03:35:01 And so a lot of things never really got off the ground because of that. 00:03:35:01 - 00:03:37:16 I'm sure you saw something similar from your side of the table. 00:03:37:16 - 00:03:38:15 - Very much so. Yeah. 00:03:38:15 - 00:03:43:01 You know, in terms of inhibitors for deal activity in the last couple of years, 00:03:43:01 - 00:03:45:23 I mean, there's no question the regulatory environment played a role. 00:03:45:23 - 00:03:46:23 It was not the only role, 00:03:46:23 - 00:03:50:19 I do think, the general economic issues including 00:03:51:08 - 00:03:54:03 most notably the interest rate environment was a big deal. 00:03:54:03 - 00:03:55:05 You know, when you have private equity 00:03:55:05 - 00:03:58:09 as big a player as it has become with that much dry powder, that 00:03:58:13 - 00:04:00:18 whatever makes it harder for them to do deals 00:04:00:18 - 00:04:02:21 will show up in the numbers. 00:04:02:21 - 00:04:05:10 But in the boardroom, because he talked about that, I mean, 00:04:05:10 - 00:04:08:19 I saw several flavors of what you're talking about. 00:04:08:19 - 00:04:09:20 I'll give you one that, 00:04:11:00 - 00:04:13:07 that kind of, sticks in my mind, 00:04:13:07 - 00:04:16:18 which is a deal that is likely to be tried, 00:04:18:00 - 00:04:19:18 regardless of administration, right? 00:04:19:18 - 00:04:23:10 So earlier this year, for example, you — You're in the boardroom 00:04:23:10 - 00:04:26:22 and you're seeing a company that wants to make a bid for another company. 00:04:28:08 - 00:04:31:09 But with one administration, they have to go in and to get that deal 00:04:31:09 - 00:04:36:01 done, they have to offer the following, remedies, pretty aggressive. 00:04:36:10 - 00:04:39:07 And with the other administration, their bet is they don't. 00:04:39:07 - 00:04:40:10 So they still want to do the deal. 00:04:40:10 - 00:04:43:20 It's not a matter of doing the deal or not doing the deal, but by waiting 00:04:44:02 - 00:04:46:07 you have the option value of maybe offering less 00:04:46:07 - 00:04:49:07 or trying to see whether you can offer less. 00:04:49:10 - 00:04:51:05 And if the deal isn't urgent, 00:04:51:05 - 00:04:53:09 right, that's the kind of deal that waits, right? 00:04:53:09 - 00:04:54:13 So that's one category. 00:04:54:13 - 00:04:55:17 Then the other category is quite 00:04:55:17 - 00:04:59:17 obviously, we have sectors and size deals 00:04:59:17 - 00:05:04:08 and they have a lot of bullseyes on them that, there really has been a deterrent 00:05:04:08 - 00:05:05:09 when you look at what the FTC 00:05:05:09 - 00:05:08:14 and the DOJ have been focused on and how novel their theories have been. 00:05:09:00 - 00:05:12:03 There's been very much a deterrent value to certain kinds of deals. 00:05:12:03 - 00:05:14:00 Not, obviously — 00:05:14:00 - 00:05:16:23 Still a lot of deals getting done and tried. 00:05:17:05 - 00:05:19:14 But it's a very aggressive regulatory environment 00:05:19:14 - 00:05:21:11 that we've been dealing with in recent years. 00:05:21:16 - 00:05:25:08 - You know, it's interesting how industry specific some of this actually plays out 00:05:25:08 - 00:05:27:14 from a pragmatic perspective, whether it's Big Tech 00:05:27:14 - 00:05:29:13 or healthcare being more in the spotlight, 00:05:29:13 - 00:05:33:23 which I do think continues from a Biden administration to a Trump administration. 00:05:34:11 - 00:05:37:20 There will continue to be enforcement and oversight. 00:05:37:20 - 00:05:42:21 It is not as though, it will be a completely no rules playing field. 00:05:42:21 - 00:05:44:23 So it'll be interesting, at least from my perspective, 00:05:44:23 - 00:05:47:22 to see how that plays out in certain of these sectors. 00:05:47:22 - 00:05:48:16 - For sure. 00:05:48:16 - 00:05:51:00 And if you look at the recent appointments, 00:05:51:00 - 00:05:54:14 because we've actually seen the appointments in the FTC and DOJ, 00:05:55:12 - 00:05:59:08 on this topic, almost the very first words you see in the press release 00:05:59:08 - 00:06:03:10 or in or in Trump's announcement is something about Big Tech, right? 00:06:03:10 - 00:06:05:10 Or in their acceptance, something about Big Tech. 00:06:05:10 - 00:06:08:15 Now it could be Big Tech, you know, 00:06:09:23 - 00:06:12:09 creating kind of censorship of certain opinions. 00:06:12:09 - 00:06:14:22 It could be that angle, it could be how big it is. 00:06:15:00 - 00:06:18:07 There's this expectation, just given Trump's 00:06:18:07 - 00:06:22:16 political orientation and kind of the mood, in general, 00:06:22:22 - 00:06:26:15 certainly on the GOP side, that there will continue to be populist 00:06:26:15 - 00:06:29:02 type attacks on at least Big Tech 00:06:29:02 - 00:06:31:10 and as he mentioned, healthcare as well, probably. 00:06:31:23 - 00:06:33:04 Because they're politically, 00:06:33:04 - 00:06:35:19 easy or desirable to do, right? 00:06:35:19 - 00:06:39:07 So politics is going to enter this just as it has in this administration. 00:06:39:08 - 00:06:40:15 It will continue in some way. 00:06:40:15 - 00:06:42:05 You recall some of the biggest 00:06:42:05 - 00:06:45:20 antitrust proceedings against our largest tech companies today 00:06:45:20 - 00:06:49:16 that are outside of the M&A context, were begun in the first Trump administration. 00:06:49:16 - 00:06:53:15 They're continuing through the Biden years, and they will most likely continue. 00:06:54:09 - 00:06:55:20 So we'll see. 00:06:55:20 - 00:06:58:22 You know, having said all that, I think net-net, 00:06:58:22 - 00:07:03:09 we do expect a more favorable deal environment. 00:07:03:18 - 00:07:06:16 Because the FTC chair and the assistant, 00:07:06:16 - 00:07:10:03 DOJ, head for antitrust will 00:07:10:03 - 00:07:13:13 more likely, sort of favor more traditional, 00:07:13:23 - 00:07:17:03 definitions of antitrust harm, namely consumer harm. 00:07:17:10 - 00:07:21:16 If you look at what the what this current administration, 00:07:21:16 - 00:07:25:02 Kanter and Lina Khan have done, I mean, in part 00:07:25:02 - 00:07:28:05 they have focused on all these other kinds of theories of harm, right? 00:07:28:05 - 00:07:33:06 Whether it's labor or vertical or, you know, other kinds of issues. 00:07:33:06 - 00:07:36:21 And they haven't won many cases, but they've imported those ideas 00:07:36:21 - 00:07:39:21 into their merger guidelines, which have no legal significance. 00:07:39:21 - 00:07:43:22 But they've created a lot of deterrent value for certain kinds of deals. 00:07:43:22 - 00:07:47:20 So I expect at least, what you'll see from Slater's 00:07:47:20 - 00:07:49:20 and, you know, she is a line attorney, 00:07:49:20 - 00:07:51:23 she spent ten years at the FTC, 00:07:53:03 - 00:07:53:18 and she's 00:07:53:18 - 00:07:56:22 now going to be at the DOJ. 00:07:56:22 - 00:08:02:00 And I think that she's, going to run it very differently. 00:08:02:00 - 00:08:03:01 I mean, she's a lawyer's lawyer. 00:08:03:01 - 00:08:05:23 - So I think we're in a bit of a wait-and-see mode 00:08:05:23 - 00:08:07:10 with respect to some of these policies, 00:08:07:10 - 00:08:09:04 particularly early on in the administration, 00:08:09:04 - 00:08:13:03 to see how far he's willing to take some of the ideas that he's put forward 00:08:13:09 - 00:08:13:20 and then what 00:08:13:20 - 00:08:17:15 the impact might be for an overall macroeconomic drop back to deal activity. 00:08:17:18 - 00:08:20:08 - That's why I'm out of the predictions business. 00:08:20:08 - 00:08:22:13 Because, when I went back and looked at, 00:08:22:13 - 00:08:24:00 the December predictions 00:08:24:00 - 00:08:27:04 for the years ahead, they always point to just one side of the ledger, right? 00:08:27:04 - 00:08:29:04 You know, what are the tailwinds. 00:08:29:04 - 00:08:32:14 In every year, I assure you pent up demand, CEO confidence, consumer confidence, 00:08:32:14 - 00:08:35:09 you know, like you name it every year has a list of them. 00:08:35:09 - 00:08:38:09 And if you're honest, every list should have 00:08:38:09 - 00:08:41:04 the debit side as well or the or the headwinds. 00:08:41:04 - 00:08:44:17 And I think this year, as you point out there are headwinds as well. 00:08:44:17 - 00:08:46:06 First of all, this political uncertainty 00:08:46:06 - 00:08:47:14 in the world, right? 00:08:47:14 - 00:08:51:10 I don't know how many people, would have expected that in a mere 11 days 00:08:51:10 - 00:08:54:22 the Syrian regime that has been in power for 50 years 00:08:54:22 - 00:08:57:18 would fall. Collapse with barely a fight. 00:08:58:16 - 00:09:02:07 That's an example of something that's, you know, could transform an entire region. 00:09:02:17 - 00:09:05:13 And we don't know yet fully the fallout from that. 00:09:05:13 - 00:09:06:16 That's just one example. 00:09:07:18 - 00:09:09:20 So there are things we can see and try to predict. 00:09:09:20 - 00:09:13:14 There are things that we should expect, will will come up that no 00:09:13:14 - 00:09:17:19 president can control because it's a bigger macro event that, 00:09:18:13 - 00:09:22:08 despite any wishes on the part of the current president or the future one, 00:09:22:21 - 00:09:25:00 you know, they're just events that happen in the world. 00:09:25:00 - 00:09:27:02 So there are geopolitical risks. 00:09:27:02 - 00:09:28:13 There are, as you mentioned, 00:09:28:13 - 00:09:29:13 policy risks. 00:09:29:13 - 00:09:31:16 We've heard a lot about tariffs. 00:09:31:16 - 00:09:34:05 Certainly, that's a good election issue for him. 00:09:34:05 - 00:09:36:12 We don't know what the Trump administration will do. 00:09:36:12 - 00:09:38:04 We think they'll be tougher. 00:09:38:04 - 00:09:39:20 But how tough? 00:09:39:20 - 00:09:41:11 You know, that's TBD. 00:09:41:11 - 00:09:44:05 - It's always a great conversation with you, and I'm glad we were able to share 00:09:44:05 - 00:09:46:23 some of what we usually talk about with a broader audience. 00:09:47:04 - 00:09:50:02 - Well, it is an absolute pleasure as always, Kevin. 00:09:50:02 - 00:09:50:13 - Thank you. 00:09:50:13 - 00:09:50:23 - Thanks.