Counsel to Counsel - November 2008 - (Page 24) in the spotlight general Counsel More Intimately Involved in down-Market deals By Steven Andersen ©iStockphoto.com/Andrey Prokhorov e conomic turmoil is never a positive for M&A activity. Uncertainty may result in specific, isolated opportunities, but it generally leads to a reluctance to do transactions because buyers can’t predict their own future, much less get an exact handle on what they’re buying. The current market instability has reduced transaction activity across the board, and particularly in the financial sector, which has been a huge M&A driver in recent years. “It’s now by far the slowest it has been in many, many years,” says H. Rodgin Cohen, chairman of Sullivan & Cromwell LLP . The absence of leverage finance has put a tourniquet on private equity deals, and the spectacular collapse of large investment banks casts a pall over even the most sanguine players. That’s not to say deals can’t be done. Cash-rich companies with a sound foundation can pluck diamonds from the rubble. But be careful—risk levels are unusually high. “The stronger you are, the more opportunities you have,” Cohen says, “but you want to be certain that you spend your stock and cash wisely.” A True Bridge In a normal market, deals are more or less routine, and typically involve in-house counsel only in the later stages of transactions. But amid such tumult, almost every deal is one-off, risky and more legally intensive. General counsel find themselves in the loop much earlier in the process. “In this climate every deal is different,” Cohen explains. “The general counsel’s role is particularly important because he or she is a true bridge between the business purposes behind the transaction and the unusual structure for the deal that is required in this economic environment. The general counsel’s role expands—both in the deal and before the deal.” Down-market deals tend to be done quickly, and the general counsel has a unique perspective on what is feasible and what is possible. Because of their nuanced understanding of the company, general “the general counsel’s role is particularly important because he or she is a true bridge between the business purposes behind the transaction and the unusual structure for the deal that is required in this economic environment. the general counsel’s role expands— both in the deal and before the deal.” 24 LexisNexis® Martindale-Hubbell® http://www.iStockphoto.com/Andrey
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.