Cash isn’t king now, but some deals will still get done in the next three months. M&A and project finance attorneys on an ABA finance panel singled out stock-for-stock and government-backed transactions as the most likely deals to go forward in that time frame.
Stock-for-stock transactions will be attractive partly because they allow companies to combine without “refinancing someone else’s broken balance sheet,” said Scott Mulcahy, an Evanston, Ill., lawyer with the investment banking boutique XMS Capital Partners who took part in the “Financial Meldown and Its Aftermath” panel on Friday. There will be more activity in the health care industry, he predicted, but deal volume in general will still be lower.
Jeff Barnes, a Toronto lawyer with Heenan Blaikie who moderated the discussion, agreed that stock-for-stock deals will rise, in part because they lure in buyers by offering some stock upside at a time when the sellers won’t budge on pricing.
The panelists also foresaw a lot of deals coming together with government financial aid. “We will continue to see a dramatic volume of government-sponsored transactions,” said Elihu Robertson, a partner in New York's Milbank, Tweed, Hadley & McCloy.
Similarly, project financing for power plants, toll roads, manufacturing plants and other facilities or infrastructure will only happen with strong corporate sponsors, companies like General Electric Co., that are willing to back the debt involved, said Carol Maters, an attorney with International Finance Corp. in Washington.