PR Newswire (paid press release):
NEW YORK, Dec. 11, 2017 /PRNewswire/ — Participants at The Deal’s 15th annual Deal Economy Conference on Thursday, Nov. 30 heard dealmaking professionals express concern about uncertainty and high market valuations along with optimism that policy changes would address that concern, creating new opportunities and as well as challenges in the year ahead.
The audience at the day-long, forward-looking event also heard Jim Cramer, founder of The Deal’s parent, TheStreet Inc. (NASDAQ: TST) and host of CNBC’s Mad Money with Jim Cramer, unveil 12 specific deal predictions for the year ahead.
Kicking off the conference at the JW Marriott Essex House in New York City, a panel on the absence of megadeals so far in 2017 was encapsulated by Latham & Watkins LLP partner Adel Alsani-Far, who noted that “boards have been reluctant in an uncertain environment to engage in mega transformative type transactions.” But Alsani-Far also noted that he expected that “that’s going to change,” thanks in part to corporate tax changes that Congress is poised to enact.
In a subsequent panel on private equity, Craig Bondy, a managing director at GTCR LLC, worried that Ebitda multiples were too high in many recent transactions because buyers were assuming too much in the way of cost reductions and revenue growth, respectively, from facilities closings and deals that had yet to be completed. Bondy also noted that due diligence that normally required months to complete was now being done in a few days.
“You’re seeing at this point in the cycle far less due diligence getting done,” Bondy said.
The panelists also commented that the many if not all the benefits from corporate tax cuts were baked into current market prices, meaning that expectations for further advances from the legislation were getting ahead of themselves.
But a panel later in the day devoted to the winning strategies of corporate dealmakers heard various members express optimism that their companies could sustain value through their dealmaking efforts. They contended that they were moving faster on deals with no sacrifice of analytical acumen, thanks to the application of new technology, including artificial intelligence. And the panelists were confident their deals would add value as a result, though they conceded that the challenges of achieving success grew more daunting as the deals helped the companies grow larger.
“When you do that, you take on more risk, and you run into a level of competition you may have not before,” conceded Brian Buchert, vice president of corporate development and M&A at consumer products company Church & Dwight Co. (CHD).
In the conference’s keynote, TheStreet’s Jim Cramer said that he expects M&A in 2018 to remain strong for competitive reasons, and he predicted that the Walt Disney Co. (DIS) and General Electric Co. (GE) would join Broadcom Ltd. (AVGO) in the action. “There are too many companies vying for the same stream of revenue in the same sector,” Cramer said. In addition, he noted that dealmaking would be spurred by the relentless disruption of industries at the hands of tech giants Facebook Inc. (FB), Alphabet Inc. (GOOGL), Netflix Inc. (NFLX) and Amazon.
A panel on corporate activism heard Delaware Chief Justice Leo Strine criticize annual say-on-pay shareholder votes. “Nobody from the investment community wants managers paid on one-year contracts,” Strine said.
Finally, a panel on cyber risk stressed that the issue had graduated from an IT job to a board level concern. “Clearly the board is responsible” for managing the growing risk posed by cyber risk, said Patricia Lizarraga, managing director of Hypathia Capital Group (LLC).
Supporting underwriters for The Deal Economy Conference included EY, Bain & Company, Ansarada, Latham & Watkins LLP, Morrison & Foerster LLP, Pepper Hamilton LLP, Venue by Donnelley Financial Solutions, Okapi Partners, ACA Aponix, Workshare and Nelson Mullins Riley & Scarborough LLP.
In 2018, The Deal will host a series of three Deal Economy Conferences. On March 26th at the Institute of Directors in London, Deal Economy London will explore the shifting European dealmaking environment. The Deal will be in Chicago on September 24th to discuss middle market dealmaking. And the annual New York Deal Economy Conference will next take place on November 29, 2018 in New York City.
Contact: Jonathan McReynolds, 212-321-5259, jmcreynolds at thedeal.com for sponsorship and speaking inquiries about next year’s event.
Contact: Nicole Harris, 212.321.5567, nharris at thesdeal.com for more information about The Deal Economy Conference.
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