As forecast, the Merger and Acquisition trend which we have been long reporting would peak when the Federal Reserve would aggressively raise interest rates and cut off the cheap money supply, has indeed peaked. Indeed, they “slowed to a trickle”… and here are the latest “trickles.” But again, as slow as it seems, the “Bigs” are still getting bigger and as the Greatest Recession worsens and more businesses go out of business, the “Big” will buy them up at rock bottom prices.
TWO GIANT LAW FIRMS COMBINE IN $3.4-BILLION DEAL
Allen & Overy, one of London’s five most prestigious and profitable international law firms, will join with New York’s Shearman & Sterling to create Allen Overy Shearman Sterling, a law megalith with 4,000 lawyers in 49 offices worldwide and revenues projected to be $3.4 billion annually.
Allen & Overy tried to enter the U.S. in 2019 by marrying California firm O’Melveny & Myers but the two were unable to agree on a value. It has been seeking a foothold in the lucrative U.S. market since.
Shearman & Sterling had tried and failed to merge with rival Hogan Lovells, then lost several of its top lawyers and began an arduous restructuring. It has found its global network of offices raised costs but has failed to boost profitability in proportion.
The combination gives the new firm greater presence in markets on both side of the Atlantic, with “over $1 billion in revenue in the U.S., 30 percent [of revenue] in the U.K., and 40 percent in the rest of the world,” Allen & Overy senior partner Wim Dejonghe told the Financial Times. “I don’t think anyone has that.”
Equity partners in both firms will vote on the deal this spring and the union is expected to be consummated later this year.
ITALIAN INVESTMENT BANK BUYS U.K FINANCIAL ADVISORY FIRM
Mediobanca, an Italian investment bank, has bought Arma Partners, a London-based financial advisory service specializing in work with technology firms.
The move is part of Mediobanca’s plan to plant its flag in the U.K. as well as to gain access to more tech clients across Europe, Great Britain, and the U.S.
The price was not disclosed, but Mediobanca agreed to pay more than twice Arma’s annual revenue, which exceeded €100 million last year.
Mediobanca will pay 40 percent now and the balance over four years. The final amount paid depends on Arma reaching certain financial performance targets, the bank said.
Mediobanca is a force in Italy but began seeking a larger footprint in 2015 when it bought Cairn Capital, a London asset manager. In 2021, Cairn bought Bybrook Capital to create a firm with the equivalent of about $8 billion under management.
Next, Mediobanca has its eye on Banca Generali, Italy’s largest private banker and chief shareholder in the Generali insurance company, people familiar told the FT.