Companies reconsidering the merits of staying public are driving a notable rise in take-private deals, as noted by Melissa Sawyer, the global head of Sullivan & Cromwell’s mergers and acquisitions group. The burdens of public company requirements, including costly regulatory compliance, quarterly reporting, and activist shareholder pressures, are contributing factors. According to Sawyer, companies often find that the capital costs post-IPO are higher than anticipated, prompting some to turn to private equity. Data from S&P Global Market Intelligence and Preqin indicates private equity firms had a record $2.59 trillion in dry powder last year due to a sluggish deals market.
In the first seven months of this year, global take-private deals reached $127 billion, nearing the total for all of last year, as reported by Bloomberg. Major transactions have included Novo Holdings’ $16.2 billion deal to acquire Catalent Inc. and Silver Lake Management’s $10 billion plan to take Endeavor Group Holdings private.
Sullivan & Cromwell has been a leading player in M&A under Sawyer’s leadership, having advised on $79.5 billion worth of transactions in the first half of the year. The firm has handled high-profile deals such as Boeing’s $8.3 billion pending acquisition of Spirit AeroSystems and Pfizer’s $43 billion acquisition of Seagen last year. Regulatory pressures, particularly from the Federal Trade Commission, have been a significant factor in extending deal timelines and increasing related costs.
Sawyer also observes a shift in how AI could potentially influence dealmaking. While current AI tools lack the accuracy necessary for complex deal work, they could eventually improve efficiency in routine tasks, challenging the traditional billable hour model. For further reading, you can access the detailed article here.