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M&A Momentum Not Slowed By Hurricane Sandy

It’s business as usual for most middle-market dealmakers, including Sullivan & Cromwell’s Frank Aquila

Despite Hurricane Sandy’s halting trading at the New York Stock Exchange and the Nasdaq and closing most office buildings in New York’s financial district (see U.S. Stock Trading Canceled as New York Girds for Storm), M&A continues with bankers, lawyers and other deal professionals conducting due diligence and other contractual work away from the risk posed by the storm.

Dealmakers whom Mergers & Acquisitions reached by phone point out that many are carrying on business as usual, even though there is life-threatening flooding occurring in some of the nation's most densely populated areas.

Such perseverance speaks to the evolution of the dealmaking profession, says Frank Aquila, partner at Sullivan & Cromwell LLP, which closed its Broad Street office in downtown Manhattan.

“People are able to do a lot of things they used to do in the office and the conference room from their homes and hotel rooms,” Aquila says. “Whether it’s from a Blackberry, iPad, virtual data room or with video conferencing, they have all made dealmaking a lot more seamless, and at a time like this when offices are being closed, you can continue the process and not put anybody’s life at risk, which is a very good thing.”

The storm, while having a big impact on the larger capital markets, is having relatively minor effects on the middle market, Aquila adds. “By and large, I don’t expect there to be any impact on the M&A markets.”

So far, there has been a steady stream of announced transactions on Oct. 29, including Clean Harbors Inc.’s (NYSE: CLH) acquiring of Safety-Kleen Inc. for $1.25 billion and Penguin Group's merger with Random House.

However, the storm may have some longer-term effects on other aspects of business, especially when it comes to property and casualty insurers, Aquila reports.

With the insurance industry already seeing an uptick in M&A over the past year, it remains to be seen whether an increase in cases or claims could lead to more firms consolidating.

And since Sandy’s potential impact is expected to be worse than 2011’s hurricane Irene, the construction, contracting and building supplies industries may also experience a long-term effect on their underlying-businesses.

“It’s too early to tell, but a year from now a couple deals may happen because of the storm,” Aquila says.

 

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