CC’s strategy during the past three years has been to support the
Whereas previously there might have been five to 10 banks available to provide debt financing for each deal, debt finance is now much more widely available, thanks to the scores of hedge funds that have entered the market. On the equity side, private equity and hedge funds firms are major players. With ever-larger funds being raised and more hedge funds willing to make private equity-style investment, financial sponsors have enormous amounts of capital available, enabling them to chase deals of increasing size and complexity. This has given them a pronounced advantage in a market where growing numbers of deals are made with cash, rather than stock. Private equity houses made five of the six largest acquisitions announced in the
The amendments by the Securities & Exchange Commission (SEC) late last year to its longstanding tender offer ‘best-price’ rule are expected to have a positive impact on the use of tender offers in negotiated public company acquisitions. These have been on the decline in recent years, mainly because of unfavourable rulings in litigation over whether employment compensation or other arrangements with target company managers violate the SEC’s best price rule. As a result of the SEC amendments, which help to delineate the rule’s limits, there should be renewed growth in the use of tender offers which, in public M&A deals, present a number of benefits — increased speed, potentially greater certainty of closing and the likelihood of simpler disclosure and lower cost.
Looking ahead, when the next downturn arrives — as it inevitably will — we expect to see a very different restructuring market. We anticipate CC will be advising on deals which, thanks to the unprecedented levels of liquidity, will provide sponsors with much greater flexibility to reach solutions out of court. Changes in the debt markets should also provide ways for companies to avoid defaults that were unavailable in the last downturn. This should lessen the number of bankruptcies resulting from distressed deals.
Strategic priorities
CC’s strategy for becoming a significant presence in the
Our core team of approximately 10 partners and 30 associates has achieved great success in each of these three priority areas. Cross-border transactions in which we have been involved recently include advising TDC on the US aspects of its $12bn (£6bn) acquisition by Apax, Blackstone, Carlyle, Kohlberg Kravis Roberts & Co and other private equity firms and advising Barclays on the sale of its stake in First Caribbean to CIBC for $1bn (£506m). We have made inroads into domestic M&A, advising American Power Conversion on its $6.1bn (£3bn) acquisition by Schneider Electric, Merrill Lynch on its acquisition of First Franklin for $1.3bn (£658m) and SL Green Realty Corporation in connection with its $4bn (£2bn) acquisition of Reckson Associates Reality Corporation. And in the private equity sphere, we have recently advised Apax on its $1.6bn (£809m) acquisition of Tommy Hilfiger Corp, as well as advising Ashmore Energy International on its acquisition of Prisma Energy International for $2.9bn (£1.4bn).
We made strategic decisions to invest in our
Our tactic has been to target a defined type of hire: all hires — whether lateral or associate — must fit in with our global culture. They have to be comfortable working from a global platform, where teaming is the defining factor (as compared to the ‘eat what you kill’ philosophy that characterises many of our US-based competitor firms). US firms with lockstep compensation such as ours do not tend to take on many lateral hires, so we stand out in the
Punching above our weight
Without doubt, the backing of the firm’s global network has helped us to punch above our weight — we were ranked eighth by M&A deal volume in North America by Mergermarket, as well as being the only non-US based firm to achieve a top 10 placing in the The Vault’s US M&A Prestige Rankings (based on a survey of 15,000 associates at 150 US law firms). CC had the sixth-most top 10 rankings in the American Lawyer’s most recent Corporate Scorecard. No other magic circle firm was in the top 15. In the last year, we have advised on more than a dozen $1bn-plus deals. These deals were led by six different partners, underlining the spread of capability within our M&A practice.
For clients and potential recruits, this network continues to be an important differentiator for us. Most of our US-based competitors have strength in
During the past 12-18 months, the
Brian Hoffmann is co-head of Clifford Chance’s M&A practice in the