Sullivan & Cromwell's Rodgin Cohen
Crisis mantra for sleep-deprived M&A attorneys: don't sweat the small stuff
October 6, 2008
Mergers and acquisitions attorneys got three multibillion-dollar bank combinations sealed in less than three weeks by rounding up teams of up to 30 lawyers as soon as a deal was in the offing, crunching a mountain of work into weekend sprints — and not letting details get in the way of core agreements.
On the most recent sale, Davis Polk & Wardell was lead counsel for Citigroup Inc. with Skadden, Arps, Slate, Meagher & Flom on strategic issues while Sullivan & Cromwell took the lead for Wachovia Corp., with support from Simpson Thacher & Bartlett.
"We all understood, you can't sweat the small stuff," said Sullivan & Cromwell Chairman Rodgin Cohen, who was the firm's lead lawyer on the team for Wachovia.
That was likely a mantra for many legal teams working the merger transactions in the latter half of September. Bank of America snapped up Merrill Lynch in mid-September, J.P. Morgan Chase stood ready to buy Washington Mutual assets after federal regulators seized the collapsing savings and loan bank not even two weeks later, and Citigroup acquired Wachovia before the month was up. The deal is now off. Wells Fargo late Thursday acquired Wachovia.
Cohen's team included a sleep-deprived Mitch Eitel, who had taken the lead for the firm in representing J.P. Morgan a week earlier in its acquisition of Washington Mutual, as well as partners Audra Cohen and Marc Trevino, he said. There were about 6 associates on the effort.
Aside from the condensed timeframe for pulling the transaction together, Cohen's team and lawyers from the other firms often faced the unusual situation of having the federal government at the table.
"The government was involved as well, so it was a not a normal one-against-one negotiation, so that presents its own challenges and its own opportunities," Cohen said.
The legal negotiations for the agreement to sell Merrill Lynch to Bank of America happened even faster than most weekend deals, logging in at under 48 hours. Shearman & Sterling lawyers delved into those talks starting on the morning of Sunday, Sept. 14, on behalf of Merrill, pulling in merger and acquisitions leader John Madden from Rhode Island and nearly 30 other lawyers from the firm.
About 10 to 15 Shearman lawyers headed to the New York offices of Wachtell Lipton, which was representing Bank of America, while the same number backed up that group from the firm's offices in the New York for any alternative provisions that might need to be drafted. Attorneys pitched in from across the firm's practice areas, including benefits, tax, antitrust, regulatory and financing.
John Marzulli Jr., was the first Shearman attorney to get to the meeting at Wachtell Lipton because he lived the closest. While the two sides reached substantial agreement on the terms of the acquisition that night, Marzulli's crew continued the document review past 3 a.m., he said.
"I have never done something on this timetable," Marzulli said. "This was new land-speed record for me."
While the activity is a boon for the legal industry in that each transaction calls for multiple firms, the short-order nature of the work doesn't bring in the same revenue as a deal accomplished over a longer period, and the elimination of an acquired bank client will hurt firms that are cut out of future work.
Skadden's mergers and acquisitions partner Eric Friedman, who led a team of 10 lawyers for three days in providing strategic and integration advice to Citigroup, expects more match-ups.
"Unless and until there's a formal bail-out program that brings stability to the financial services sector, there's every reason to believe there will be more turmoil throughout the industry," Friedman said. "Turmoil leads to deals."
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