Posts Tagged ‘Schulte Roth & Zabel’

Shareholder Activism: 2013 and Beyond

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday February 13, 2014 at 9:35 am
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Editor’s Note: The following post comes to us from Marc Weingarten and David E. Rosewater, partners and co-heads of the shareholder activism practice at Schulte Roth & Zabel LLP, and is based on their article “Shareholder Activism: 2013 and beyond,” which appeared in The Activist Investing Annual Review 2014, published by Activist Insight in association with Schulte Roth & Zabel LLP. The complete publication is available here.

Schulte Roth & Zabel’s Shareholder Activism practice was at the forefront of the industry in 2013, advising our clients in a number of proxy contests. These are our observations from a busy year.

Rapid growth with many new entrants

By almost any measure, shareholder activism became more popular in 2013 than ever. With assets under management quickly growing and returns consistently outperforming the average hedge fund, the activist sector has seen an influx of new activist-oriented funds. As activist investors have appeared on the cover of Time magazine and filled the pages of Vanity Fair throughout the year, it is clear that investors and boards are not the only ones interested in learning more about shareholder activism.

…continue reading: Shareholder Activism: 2013 and Beyond

Large and Middle Market PE/Public Target Deals: 2012 Review

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Saturday April 27, 2013 at 9:29 am
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Editor’s Note: The following post comes to us from David Rosewater, partner focusing on mergers & acquisitions at Schulte Roth & Zabel LLP. This post is based on a Schulte Roth & Zabel report by Mr. Rosewater, John M. Pollack, and Neil C. Rifkind; the full publication, including charts and appendices, is available here.

Overview

Schulte Roth & Zabel regularly conducts studies on private equity buyer acquisitions of U.S. public companies with enterprise values in the $100 million to $500 million range (“middle market” deals) and greater than $500 million (“large market” deals) to monitor market practice and deal trends reflected by these transactions. During the period from January 2010 to Dec. 31, 2012, there were a total of 40 middle market deals and 50 large market deals that met these parameters.

…continue reading: Large and Middle Market PE/Public Target Deals: 2012 Review

2012 Distressed Investing M&A Report

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday January 10, 2013 at 9:15 am
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Editor’s Note: The following post comes to us from David Rosewater, partner focusing on mergers & acquisitions at Schulte Roth & Zabel LLP. This post is based on a Schulte Roth & Zabel report; the full publication, including charts and figures, is available here.

Schulte Roth & Zabel is pleased to present Distressed Investing M&A, published in association with mergermarket and Debtwire. Based on a series of interviews with investment bankers, private equity practitioners and hedge fund investors in the US, this report examines the market for distressed assets at home and abroad.

Economic uncertainty brought on by the looming US “fiscal cliff” have placed companies in difficult situations where many are forced to sell assets and restructure operations and debt in order to avoid a court mandated sale further down the line. The value gained and time saved by selling assets prior to in-court restructuring and liquidation is signaled by the respondents’ shift toward dealmaking early and out-of-court.

Outside of the US, the eurozone crisis and macroeconomic concerns in the emerging markets are having a similar effect. While some are waiting for a solution to the sovereign debt crisis, distressed investors are geared to take advantage of attractively-priced assets within the region. Hyperinflation remains a concern for the markets in Latin America and India, while economic growth has slowed in Brazil and China. Both are likely to create distressed opportunities over the next 12 months.

Respondents cite the energy sector as likely to be the most active for distressed M&A in the next year. Low natural gas prices in the US are hitting the bottom line and companies are feeling the strain. Additionally, inflation concerns in Asia may expose manufacturing companies, who respondents describe as “losing the battle” against prices.

In addition to the above findings, this report provides insight into pricing, litigation, club deals, and various other issues concerning the distressed M&A community. We hope you find this study informative and useful, and as always we welcome your feedback.

…continue reading: 2012 Distressed Investing M&A Report

2012 Shareholder Activism Insight Report

Posted by Marc Weingarten, Schulte Roth & Zabel LLP, on Monday November 26, 2012 at 9:04 am
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Editor’s Note: Marc Weingarten is partner and chair of the Business Transactions Group at Schulte Roth & Zabel LLP. This post is based on a Schulte Roth & Zabel report by Mr. Weingarten and David Rosewater; the full publication, including charts and figures, is available here.

Schulte Roth & Zabel is pleased to present the 2012 edition of Shareholder Activism Insight, published in association with mergermarket. Based on a series of interviews with corporate executives and activist investors, this report highlights emerging trends in shareholder activism, as well as insights into the changing corporate landscape investors and executives will face in the coming years.

Corporate executives should expect to see increasing opposition from shareholders during next spring’s proxy season, according to the 78% majority of overall respondents. Using poor financial performance and the need for management or operational change as motivation, hedge funds, pensions and unions will continue the growth of shareholder activism. A significant increase in shareholder proposals will result, according to 84% of respondents.

The financial services sector is expected to see the greatest amount of shareholder activism as investors look to repair the still recovering industry after the crash of 2008. Distant runners-up, the industrials and chemicals, technology, and energy sectors are also expected to see more disputes with investors.

Half of respondents believe an active dialogue between shareholders and management can be the most effective defense tactic against activism. When a company prefers to be more active in preventing shareholder disputes, respondents cite offensive litigation, poison pills and staggered board elections as the likely defense tools.

…continue reading: 2012 Shareholder Activism Insight Report

Middle Market Private Equity Buyer/Public Target M&A Deal Study

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday November 4, 2012 at 10:44 am
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Editor’s Note: The following post comes to us from John Pollack and David Rosewater, partners focusing on mergers & acquisitions at Schulte Roth & Zabel LLP. This post is based on the Schulte Roth & Zabel Middle Market PE Buyer/Public Target M&A Deal Study; the full publication, including appendices, is available here.

Overview

We regularly conduct studies on private equity buyer acquisitions of U.S. public companies with equity values greater than $500 million (“large market” deals) to monitor market practice reflected by these high-profile transactions. Recognizing the importance of M&A activity in the $100 million to $500 million target equity value range (“middle market” deals), we are commencing a new deal study that identifies “market practice” involving private equity buyer acquisitions of U.S. public companies in the middle market. We also compare our findings for middle market deals to our findings for large market deals. During the period from January 2010 to June 30, 2012, there were a total of 36 middle market deals and 43 large market deals that met our parameters.

Part One

Key Observations: Market Practice and Trends in the Middle Market

  • 1. Activity in the middle market is down year over year. Only 5 deals were signed in 1H 2012 compared to 11 in 1H 2011, a decrease of 55%. Mean equity values of deals in 1H 2012 rose 21% when compared to 1H 2011. The year started with no activity — all of the 1H 2012 deals were signed in the second quarter. (See Chart 1.)

…continue reading: Middle Market Private Equity Buyer/Public Target M&A Deal Study

Insider Trading Developments — Summer 2012

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday October 8, 2012 at 9:04 am
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Editor’s Note: The following post comes to us from Paul N. Roth, founding partner and chair of the Investment Management Group at Schulte Roth & Zabel LLP. This post is based on a Schulte Roth & Zabel newsletter by Eric A. Bensky, Harry S. Davis, Howard Schiffman and Katherine Earnest; the full publication, including a detailed chart of DOJ/SEC insider trading actions, is available here.

While the insider trading conviction of Rajat Gupta and SEC settlement with Hall of Fame baseball player Eddie Murray attracted headlines — and the 12-year prison sentence imposed earlier this summer on former corporate attorney Matthew Kluger set a new standard for criminal insider trading penalties — there have been several other legislative, regulatory and judicial developments in recent months relating to insider trading that are of equal or greater significance. All reflect an increased focus on preventing and prosecuting the trading of securities and commodities based on material nonpublic information.

Congress has passed legislation expressly prohibiting its members and other government officials from trading on nonpublic information they learn from their official positions, even as a prominent Congressman was investigated regarding (though ultimately not charged with) such alleged trading. Meanwhile, the Department of Justice and the SEC have continued their active pursuit of those they believe supplied and traded on inside information obtained and disseminated via “expert network” investment research firms. Finally, courts and prosecutors have demonstrated an inclination to find at least the possibility of illegal insider trading even when the information came from an indirect source or via seemingly benign means.

These recent developments all suggest that, in the current environment, investors and investment advisers should be particularly vigilant in ensuring that they and their employees do not acquire and trade on nonpublic information obtained directly or indirectly from an individual or entity who was not authorized to disclose it, or that otherwise is not in the public domain.

…continue reading: Insider Trading Developments — Summer 2012

Private Equity/Public Target Deals: Mid-Year Update

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday August 20, 2012 at 8:21 am
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Editor’s Note: The following post comes to us from John Pollack and David Rosewater, partners focusing mergers & acquisitions at Schulte Roth & Zabel LLP. This post is based on the Schulte Roth & Zabel PE Buyer/Public Target M&A Deal Study: 2012 Mid-Year Update, which is available here. Posts about previous versions of the study are available here, here, and here.

The large private equity buyer/public company segment of the U.S. M&A market (all cash deals over $500 million) was significantly affected in the first half of 2012 by troubles in the U.S., European and global economies. Only six trans­actions within our deal parameters were executed. Five of them had key deal terms generally consistent with our prior observations; the remaining transaction, Insight Ven­ture Partners/Quest Software, had certain key deal terms (“go-shop” period, target break-up fee and buyer reverse termination fee) that were outliers. Accordingly, for certain of our observations below, we have expressed the data including and excluding Insight Venture Partners/Quest Software (“Quest Software”). [1]

1. Fewer deals were completed in 1H 2012 and average deal size decreased. The decline in deal activity that began in Q1 2011 continued in 1H 2012. In 1H 2012, deal activity was down 33% compared to 1H 2011, and down 25% compared to 2H 2011. On an annualized basis, deal activity in the segment surveyed decreased 29% in 2012 compared to 2011. Equity values were also lower. For 1H 2012, in the deals within our survey, mean equity value fell 21% when compared to 1H 2011 and 54% when com­pared to 2H 2011. (See Chart 1 below.)

…continue reading: Private Equity/Public Target Deals: Mid-Year Update

Private Equity Buyer/Public Target M&A Deal Study

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday May 25, 2012 at 10:26 am
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Editor’s Note: The following post comes to us from John Pollack and David Rosewater, partners focusing mergers & acquisitions at Schulte Roth & Zabel LLP. This post discusses the Schulte Roth & Zabel Private Equity Buyer/Public Target M&A Deal Study 2011 Year-End Review, which is available here. Posts about previous versions of the study are available here and here.

Survey Methodology

We conducted our survey as follows:

  • We reviewed the treatment of certain key deal terms in all private equity buyer/public company target cash merger transactions involving consideration of at least $500 million in enterprise value [1] entered into during 2010 and 2011, which totaled 37 transactions.
  • We then compared the treatment of such deal terms in the 20 transactions entered into between Jan. 1, 2010 and Dec. 31, 2010, which we refer to as the “2010 Transactions,” with the treatment of the same key deal terms in the 17 transactions entered into between Jan. 1, 2011 and Dec. 31, 2011, which we refer to as the “2011 Transactions.”

Key Observations

As widely reported, 2011 was a tumultuous year characterized by economic uncertainty. The European sovereign debt crisis and the downgrade to the U.S. credit rating caused significant volatility in the U.S. debt and equity markets. The large private equity buyer/public company segment of the U.S. M&A market was not immune to these factors. Deal activity was down overall relative to 2010 and the deals that were completed in 2011 took longer to complete.

…continue reading: Private Equity Buyer/Public Target M&A Deal Study

Registration of Investment Advisory Affiliates

Posted by Paul N. Roth, Schulte Roth & Zabel LLP, on Friday February 24, 2012 at 9:31 am
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Editor’s Note: Paul N. Roth is a founding partner of Schulte Roth & Zabel LLP and chair of the firm’s Investment Management Group. This post is based on a Schulte Roth & Zabel Client Alert by Mr. Roth, Marc E. Elovitz, and Brad L. Caswell.

On Jan, 18, 2012, the SEC’s Division of Investment Management issued a no-action letter [1] permitting registered advisers to private funds (“filing advisers”) to include general partners and similar SPVs of their affiliated funds on the filing adviser’s Form ADV. In addition, U.S. filing advisers who have affiliated investment advisory firms which are controlled by, or under common control with, the filing adviser, may include such affiliates (“relying advisers”) on their Form ADV, when they are considered part of a single advisory business. The staff set forth certain circumstances where a single advisory business would exist, absent facts suggesting otherwise. This Alert focuses on the practical implications for our clients of the Staff’s no-action letter.

Fund General Partners, Managing Members and Similar SPVs

Fund general partners, managing members and other similar SPVs generally do not need to separately register provided that the SPV, its employees and persons acting on its behalf are subject to supervision and control by the registered adviser, and therefore are “persons associated with” the registered adviser. This position applies to registered advisers with single or multiple SPVs. An SPV with independent directors may also rely on this position provided that those independent directors are the only persons acting on the SPV’s behalf that the registered adviser does not supervise and control.

…continue reading: Registration of Investment Advisory Affiliates

UK Special Administration Regime

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday December 4, 2011 at 9:20 am
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Editor’s Note: The following post comes to us from Lawrence V. Gelber, partner at Schulte Roth & Zabel LLP, and is based on a Schulte Roth & Zabel client alert by Mr. Gelber and Ron Feldman.

The UK Financial Services Authority (“FSA”) confirmed on 31 Oct. 2011 that MF Global UK Limited (“MF Global UK”) will be subject to the new Special Administration Regime (“SAR”). [1] This is the first time that the new regime, set out in The Investment Bank Special Administration Regulations 2011 (“SAR Regulations”) [2] has been invoked.

Background

The SAR Regulations were made under the powers set out in Sections 233 and 234 of the Banking Act 2009. They came into effect on Feb. 8, 2011 and are supplemented by The Investment Bank Special Administration (England and Wales) Rules 2011 [3] (“SAR Rules”) which came into force on 30 June 2011.

The purpose of the new SAR is to address perceived deficiencies in the UK insolvency regime in the case of the collapse of an investment bank and highlighted by the collapse of Lehman Brothers in 2008 such as: [4]

  • Ascertaining which assets are client assets and which firm assets;
  • Interpreting the effect of, and the interrelationship between, various contracts and master agreements such as prime brokerage agreements, futures agreements, stock lending agreements and ISDA master agreements;
  • Establishing the extent of any right of use; and
  • Determining and allocating any shortfalls in client omnibus accounts.

…continue reading: UK Special Administration Regime

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