Just like the economy, the Mergers and Acquisitions world is shaped by countless, ever-evolving factors. Numerous considerations, such as looming concerns of a recession (both globally and here in the United States), trade tensions with China and the uncertainty that is inevitable during presidential election years can dictate how and when companies should seek to expand their business vis-à-vis an M&A deal.
The U.S. saw approximately $1.5 - $1.7 trillion in domestic and international M&A deal volume in 2019, representing an approximate 8% decrease from 2018, while domestic IPO activity rose by approximately 45% from 2018 to approximately $60 billion in activity in 2019. Notable highlights include Disney’s acquisition of 21st Century Fox for $84 billion, DowDuPont’s $40 billion spin-off of Dow Inc., and the $8.1 billion Uber IPO. A strong U.S. economy relative to Europe and Asia, increased valuations resulting from corporate tax cuts and decreased regulations seems to have caused over-valued businesses and increased corporate leverage, thus partially explaining the decrease.
Election years, like 2020, often cause market uncertainty as companies brace themselves for changes in the regulatory, economic and geo-political landscape. Fortunately for private equity investors and strategic buyers, this uncertainty often leads to (i) companies looking to remain proactive as a means of strengthening themselves during periods of uncertainty and staying ahead of their competitors, and (ii) potentially lower valuations. With record-levels of available cash being held by private equity firms (aka “dry powder”) estimated at $1.3 trillion at the outset of 2020, these investors will likely be chomping at the bit to take advantage of these reduced valuations as they aggressively seek to deploy those funds. On the other side of the equation, Ernst & Young’s latest “Global Capital Confidence Barometer” found that 52% of senior executives that responded to the survey expected their company to actively pursue an M&A transaction during 2020. In other words, 2020 should see an increase in M&A activity.
What does this mean for you and your business? The bottom line is that if you were ever thinking of selling or expanding your business, 2020 might be a golden opportunity for you to do so as these private equity investors and strategic buyers are potentially looking for companies such as yours. To that end, have you ever conducted a formal valuation of your business? Are you facing stagnant revenues and are unsure of how best to take your company to the next level? Are you looking to expand your business into new markets, new regions or expand your ability to offer new products? To discuss where to take your business in 2020, please feel free to contact me at KLawrence@swc-law.com or (516) 228-1300.
Michelle Greenberg, discusses the trends in commercial real estate that she thinks we will see in 2020:
• Despite the challenges WeWork faced since their failed IPO, there continues to be significant growth in the flex office space providers in the likes of Knotel and Spaces by Regus. Occupiers are looking for flexibility to grow and contract, as well as the ability to invest in retaining and attracting talent. Co-working offers a flexible menu of options with modern facilities which make including co-working a very attractive option as part of a corporate client’s real estate strategy. Additionally, given the competition and demand for amenity spaces, owners are creating their own brand to offer similar services in order to attract tenants.
• Tech growth continues – Despite Amazon HQ2 pulling out of Long Island City in 2019, leaving a $3 billion incentive package on the table, Silicon Valley keeps pushing forward in New York City. Facebook completed a deal in November 2019 to take 1.5 million square feet at 50 Hudson Yards and they are not the only tech company with grand New York City plans. The access to tech talent in the New York City metro area has been a catalyst to growth and look for this trend to continue in 2020.
• Sustainability efforts continue to trend as building owners try to minimize carbon footprints through implementation of energy efficiency improvements and savings. This will continue as New York City legislation goes into effect requiring buildings over 25,000 square feet to reduce greenhouse gas emission by 40% by 2030 increasing to a targeted 80% decrease by 2050). It is estimated that the Climate Mobilization Act will impact 60% of the current building stock as a result.
Christian Browne and Elaine Colavito successfully prosecuted their clients’ claim for title to property by adverse possession in a dispute between property owners in Long Beach. The case arose in the aftermath of Hurricane Sandy, when many properties in Long Beach were severely damaged. The storm brought down large trees in the clients’ backyard and destroyed a 40-year-old fence that ran along their rear property line.
The clients attempted to replace the fence on the same line after the storm, but the replacement drew an objection from their neighbor to the rear, who claimed that the fence was several feet on to his property. Subsequently, the neighbor sold his parcel to a developer who proceeded to knock down the clients’ new fence when he began construction of a new house on the neighboring lot. The firm's clients' commenced an action against the developer, claiming that they had acquired title to the area around the fence by adverse possession and seeking a judgment ejecting the developer from the disputed land.
After a trial before Nassau County Supreme Court Justice Steven Jaeger, the Court found that the Plaintiffs had proven their claim to title to the disputed land by “clear and convincing evidence.” The Court also ruled that the defendant developer should be ejected from the disputed area and awarded the clients money damages for the damage done to their fence.
Michael Sahn guided Fogo de Chao in opening its new, 300 seats upscale Brazilian steakhouse in Carle Place. Fogo de Chao has restaurants throughout the United States and in many countries. The restaurants feature top quality food, prepared in the traditional Brazilian culinary technique and upscale dining environments. The Firm represented the restaurant through a series of land use, zoning and administrative approvals to a successful opening just before the holidays. Read More here about the successful opening.
Joshua Brookstein, a Partner with the Firm, will receive the 40 Under 40 award from Long Island Business News at a special ceremony on February 6, 2020 at the Crest Hollow Country Club in Woodbury. The 40 Under 40 Awards celebrate future leaders of Long Island who have already begun to distinguish themselves in business, government, education and the not-for-profit sector. They also have a proven track record of career success, and are involved with mentoring and promoting their profession while giving back to their local communities.
Adam H. Koblenz, serving as lead counsel, along with the assistance of Ralph Branciforte and Joseph D. Brees, recently mediated an employment and labor dispute that resulted in a successful settlement through mediation. A former employee filed various claims with the New York State Division of Human Rights and the Equal Employment Opportunity Commission against the Firm’s client, a large Queens based nationwide manufacturing and wholesale distribution business, alleging violations of the Fair Labor Standard Act and New York Labor Law for, inter alia, wage, overtime, gender and age discrimination. As a strategic measure, Adam successfully steered the administrative and agency-based claims to private mediation instead of traditional litigation in State or Federal court. As this case demonstrates, mediation can serve as a cost effective method to resolve disputes, while saving the parties valuable time and resources often expended in protracted and costly litigation.