00:00Looking at some of the deals you've been on, you have some really big names like SpaceX
00:03and then buying XAI, Cisco and Restaurant Depot. I just wonder how you rank the health and
00:10sustainability of what we've seen in the first half and what it means going forward here in
00:152026. Well, I think it's actually a really healthy M&A environment because what we're seeing is
00:21deals of all sizes in all sectors. And it's not just one or two blockbuster transactions,
00:27but there's a lot happening and it's global, it's cross border. And so for me, that means that the
00:33pipeline will continue to refill as those deals run off. Just on that one specific deal, as much
00:40as you can, I mean, the SpaceX deal, I feel like Elon Musk is notorious for like cycling through
00:44people, but he's really stayed with Sullivan and Cromwell. I wonder just what it takes to not only
00:50get a high profile client like that, but to make sure they're satisfied and stay with the firm.
00:55At the end of the day, it's client service business. It's about being responsive. It's
00:59about being smart. It's about being committed and finding creative solutions to what they're
01:04trying to accomplish. I think a big part of it is understanding what their strategy is and just
01:08helping them execute on it. You can't just come in and be episodic and show up on the day of
01:13the
01:13deal and expect that they're going to want to hire you again. It is one of these mega deals. What
01:18do
01:18you think the split is going forward? Because the comment has been made and you said this isn't
01:22necessarily what you're seeing, but it is just like the era of mega deals and maybe the small
01:27and mid cap aren't as robust as what we're seeing on the top line. Is there a split where you
01:32think
01:32that the smaller and mid cap deals have some catching up to do with just like the amount
01:37of mega deals we're seeing? Yeah, we'll see more small and mid-sized deals once the private equity
01:42market comes back a little bit. That's been pretty anemic for the last year, but it won't stay on ice
01:47forever. And I think once that comes back into play, we'll see more of that. What does it take for
01:51that to come back? I think a healthier and more predictable financing environment. I think right
01:59now the strategics are actually being really competitive in what they're able to pay for
02:04assets, in part because a lot of them are going through these kinds of transformational changes
02:09around AI and sort of embracing adjacent strategies to what they do today. And it's hard for private
02:17equity to compete with strategics who are motivated because the strategics get synergies out of their
02:22deals that private equity doesn't get unless they're doing some sort of a platform strategy.
02:28Is there any element of the pace of strategics in corporate M&A that we've seen is just
02:32the regulatory environment is favorable. And so there's a rush to just get deals done until,
02:37I don't know, maybe things change at the midterms or something of that nature.
02:41I mean, people say that. I think if that were really true, we would see more activity in healthcare
02:46and traditional tech because those are the two sectors that were hardest hit under the last
02:52administration by our very tight regulatory policy. And actually, we're not seeing a lot of frothy M&A
02:59activity in those two sectors at the moment. And so I don't think we can attribute everything to the
03:04regulatory environment. It also, it's a healthier regulatory environment at the federal level in the U.S.,
03:10but outside the U.S., not much has changed. And even within the U.S., the states are getting very
03:16active. So there's still a lot of hair in any sort of regulatory analysis and a lot of preparation
03:21needed to get deals done.
03:23We talked about this when you were on the show in February, this idea of, yes, federally, you can get
03:29things approved, but you face this backlog when you come to the states. I mean, even California's AG
03:33going after the Warner Brothers discovery deal. Does it seem like it's gotten worse since the start of
03:40the year?
03:40I think it has, personally. I think the politicization of antitrust at the state level is gaining as we go
03:49through time. And as we approach the midterm elections, we'll probably see even more of that. I just think
03:54companies need to be prepared with their messaging to make sure that what they're saying about their deals not only
04:00appeals to shareholders, but also appeals to labor unions, appeals to consumer advocates and all the other
04:07stakeholders in that state ecosystem.
04:10Are there deals that you've looked at that you've maybe advised on or you've said, look, this looks
04:16possible that it'll get past federal regulators, but it won't in the state? And that's a reason maybe to
04:21not pursue a deal. Is that occurring right now?
04:23You know, I haven't, I'm not in the business of telling people they can't get their deals done.
04:27I like to facilitate transactions. I think the conversation is more about here's an area where you may run
04:33into some friction. And here's some steps that you may want to take in the planning process to make
04:37sure that when you encounter that friction, you're fully prepared to deal with it.
04:41By the way, on the federal side, does it seem like there's any type of deal that can't get done?
04:46I mean,
04:47we were talking about even earlier this year of potentially two of the biggest airlines in the
04:52United States merging something that I think people couldn't even dreamed of before is literally
04:56everything on the table right now, Melissa. So no. And I'll give you a really easy and obvious example.
05:03I think if a Chinese buyer wanted to come into the States and buy a hyperscaler, that's not going to
05:08happen.
05:08Right. And so there are certainly examples of deals that I think would be very difficult to get done right
05:13now.
05:15So yesterday or the day before yesterday, we got a Supreme Court ruling in the slaughter case that essentially
05:20said, yes, the president, the administration can remove heads of various agencies with cause or at will
05:27rather. And I wonder if that introduces any regulatory volatility into the picture for you, for your
05:33clients, especially this idea that perhaps regulatory agencies maybe have some consistency through
05:39administrations, if that completely removes any veneer of that continuity.
05:43There is always going to be continuity because at the staff level within the agencies, you have career
05:49civil servants who are economists and whose job it is to analyze data that supports the analysis that
05:57they do of transactions. That hasn't changed at all. I think it has always been the case that at the
06:03most senior levels where there are political appointees, it can change the tone from the top
06:08on transactions. And I think that Supreme Court decision, while it has important implications, hasn't
06:15moved the needle that much. So I wouldn't overstate its significance in terms of shifting regulatory
06:20policy. We'll always see a shift in tone with each new administration that comes in.
06:26How much, I guess, what is the kind of line between a shift in tone versus actual policy? How often
06:32do you
06:33see, I mean, you were kind of talking about this heading into the midterms, you get these, this kind of
06:37rhetoric from politicians. I mean, does it seem it's a Trump administration that seems like they were
06:42talking about a lot of deregulation? And we have gotten a lot of deals coming through. I wonder
06:46where you sort of draw the line in between like what's talk and what actually gets enacted into
06:50policy and makes a difference for your clients? Yeah, I mean, there are a lot of changes big and
06:55small that make a difference. I mean, to give a couple of examples on the SEC side of things, this
07:01SEC
07:01is working very hard with dealmakers to try to come to practical solutions that solve, in some cases,
07:09really little problems that don't get a lot of daylight in the press. But this SEC, for example,
07:16came out and solved an issue that related to how quickly you have to do a broker search on an
07:21M&A
07:22transaction. This is not the type of issue that anybody gets fired up talking about, but it was a
07:27thorny technical issue that they came in and fixed. So there's a lot happening behind the scenes that
07:32has actually been very helpful from a dealmaking perspective. That's really interesting. I do wonder,
07:37though, just how complicated this environment has gotten, not just from the regulatory side,
07:41but from the technology side. And you can put regulatory in with that when you have a Trump
07:45administration, for example, kind of dictating the top models that Anthropoc could sell or wanting
07:50to take stakes. The technology is changing in real time, as is the regulation. Just how difficult
07:56is this sector? Any sort of thing that touches AI to due diligence right now?
08:01I mean, it is a crazy time. That's probably our biggest practice area right now is doing AI compute
08:09and energy adjacent transactions related to that industry. It is the biggest disruption in any
08:15industry that I've seen in my lifetime. I think policy is one piece of it. And there are elements
08:22of the policy that are actually incredibly helpful in allowing energy policy, for example,
08:27to support investment in that sector. There's too much demand. There's not enough supply right now.
08:33Prices are nuts. The size of these deals, which in many cases don't even hit the lead tables because
08:38they are more in the nature of project finance deals, is dwarfing anything else that's happening
08:44in the market. And on top of that, you're seeing investment bankers who used to brand themselves as
08:49TMT bankers. They're now branding themselves as digital infrastructure bankers. So the entire ecosystem
08:56of dealmaking is shifting into this new linguistic environment where people are talking about AI
09:01differently.
09:02By the way, one of the places in terms of AI that people said, oh, this is going to be
09:06really
09:06disrupted is law firms. Like it was, oh, you're not going to get these juniors coming in. The work
09:10that they were doing is going to be done by AI. How much of that disruption have you actually seen
09:14at Sullivan and Cromwell?
09:15We haven't seen a disruption in training yet. We are still hiring like gangbusters. We almost can't get
09:23enough talent. We want more. I think the big difference is now we have these much more sophisticated
09:29tools for people to work with. And we actually have to make sure that our more senior lawyers are also
09:35learning how to use them so that they can exercise oversight over what the more junior people who are
09:40more AI native are doing.
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